Nisus Finance to invest Rs 500 cr in distressed realty projects by March

Nisus Finance, a debt fund focused on real estate, plans to invest the entire Rs 500 crore from its second platform by March next year, as it sees good opportunities for providing last mile capital to complete housing projects and acquisition of distressed assets during this COVID-19 pandemic.

Nisus Finance had launched its first fund named 'Real Estate Asset Performance Fund 1' totalling Rs 430 crore, which was invested across nine projects.

"In March this year, we announced first closure of our Rs 500 crore real estate fund. This new fund is in partnership with Dalmia Group," Nisus Finance MD & CEO Amit Goenka told PTI in an interview.

The two partners have committed Rs 100 crore in this fund, while Rs 400 crore is being committed from HNIs and family offices, he added.

"Our new fund from Dalmia Nisus Finance of Rs 500 crore is under deployment and we hope to be able to employ this capital by March 2021," he said.

Goenka said the discussions are in advanced stage for three investment deals. "The average size of the deals will be around Rs 30-40 crore," he said, adding that the size of the fund could be increased if the Rs 500 crore gets successfully deployed.

Goenka said the investment opportunities have increased significantly after the outbreak of coronavirus pandemic, with several housing projects in distress due to liquidity concern.

The fund is investing across three key strategies.

"First towards mid-income and affordable housing projects in the key micro markets of major metros in India. Such projects need last mile capital for completion and already have reasonable sales. With internal accruals slowing down, developers are shoring up cash to accelerate completion and sales," Goenka said.

Secondly, he said the fund will target distressed opportunities where there is significant intrinsic value but needs new capital and a development partner. "Our capital helps strong development companies acquire such assets and share the upside with the Fund," he said.

Thirdly, Goenka said the fund will also explore balance sheet financing for Tier 1 developers who are consolidating the sector through JV/JD/DM or acquisition models.

"These are highly value accretive strategies with the current pandemic that new money can capitalize on and earn high risk adjusted returns," he added.

Goenka is the managing partner of the Dalmia Nisus Finance Managers that manages Real Estate Credit Opportunities Fund -1. Gaurav Dalmia is the Chairman of the Advisory Board of the Fund.

On the first Rs 430 crore fund, Goenka said exits have already taken place in seven out of nine investments. "We are looking at exiting from the remaining two investments by the end of this year."

Nisus Finance Services Company (NiFCO) is an alternatives manager in India with a real estate-focused debt/ mezzanine fund.

NiFCO has transacted over Rs 2,000 crore of assets, managing Rs 450 crore within its funds through its AIF, NBFC and third party asset management within the last couple of years.

Goenka was earlier the Founder, MD & CEO of Essel Finance, part of the ZEE Group, managing financial services and real estate funds, both domestic and offshore.