Milestone Capital Advisors to raise Rs 500 cr for its 10th real estate fund

The private equity firm to exit from five funds by the end of the year

Private equity firm Milestone Capital Advisor's today announced its plan to set up Milestone Opportunity Fund-10 (MOF-10) with a corpus of Rs 500 crore.

The fund raised completely from the domestic markets has Tata Investments as anchor investor and will have contribution from high networth individuals (HNIs), pension funds, financial investors among others.

The first closing of the fund worth Rs 150 crore will be done by April of this year. The fund will have a relatively shorted tenure of three-and-a-half-years, as against other five to seven years funds on offer, and will invest across mid-segment to upper mid-income residential projects in potential micro-markets of top five metros comprising of Mumbai, NCR (Gurgaon & Noida), Chennai, Pune and Bangalore.

Alok Aggarwal, managing partner and CEO-Real Estate, Milestone Capital Advisor said: "In terms of focus we will be investing in residential projects, with a time period of investment of 3.5 years. We will be able to invest in about 10 projects from this fund, with a ticket size of Rs 40-60 crore."

He further added that the fund will be biased towards structured debt rather than equity. "We are not saying no to equity. But we will do equity only with developers with good track record and brand and with whom we have worked earlier. In terms of structure we will look at 70 per cent debt and 30 per cent equity," said Aggarwal.

Milestone that has raised over Rs 3,700 crore across nine PE funds since 2007, will also exit from some of its earlier funds. By the end of this year, Milestone will have final closures of about five funds.

"Of the total investment amount of Rs 2,868 crore we have returned about Rs 2,063 crore to investors. In the last 18 months alone we have returned close to Rs 1,400 crore to investors," said Navin Kumar, executive director, Milestone Capital Advisors.

The firm claims that MOF-10 will have an internal rate of return of around 22-24 per cent. "If you look at the pre 2010 funds then the IRR was between 10-14 per cent. The post 2010 funds had an IRR of 16-18 per cent. We are confident of the 22-24 per cent IRR is because of our learning's in the past.