Pai-backed Neev realty fund to shut down as tier-II developers struggle

In a telling sign of challenges faced by second-rung real estate developers, former Infosys chief financial officer T V Mohandas Pai and Manipal Group scion Ranjan Pai, along with other investors, could wind down a real estate fund floated by them to invest in tier II developers, said a source in the know.
 
The fund called Neev was floated in 2016 and the partners were planning to raise Rs 2.50 billion initially for the fund. Of that the drawdown has been Rs 900 million so far, invested across three deals.
 
The original plan was to take the fund corpus to Rs 10 billion.

 

Apart from Mohandas and Ranjan, Salarpuria Sattva Managing Director (MD) Bijay Agarwal, Micro Labs Chairman Dilip Surana, Manipal Group advisor Abhay Jain, and Prashant Deshpande, son of Karnataka Revenue Minister R V Deshpande, are partners in the fund.
 
“We have gone slowly because of the market.
 
We will take a call on whether to continue with the fund or close it down in two to three months,” said Jain, adding that if markets revived, they would continue with the fund.
 
Mohandas Pai and Ranjan Pai could not be contacted for comments.
 
The fund was to make small-sized investments in tier II property developers in Bengaluru and Mumbai, among others.

 
“Most of the tier II developers are stressed. We will watch the market conditions,” Jain said.
 
The Pais, who are not related, have made the investments through Aarin Capital, their proprietary investment vehicle. While Aarin has made numerous seed investments and taken part in early and growth stage funding of various companies, this was its first entry into real estate, reports said.
 
Neev was looking to invest through debt deals or construction finance and finance against inventory, in small builders.
 
According to real estate experts, tier II property developers are seeing a lot of challenges after the implementation of Real Estate (Regulation & Development) Act, or Rera, while the goods and services tax (GST) curbed their cash flows. Most of them opted to sell their projects to bigger players such as Godrej Properties, L&T Realty, etc or merge with them.