Altico Capital to allocate 15 to 20 per cent funds to commercial realty

Altico Capital, floated by private equity funds Clearwater Capital Partners, Abu Dhabi Investment Council and Varde Partners, is looking to hike its allocation to commercial properties to 15-20 per cent, from sub-10 per cent currently. It is also looking to lend to infrastructure, manufacturing and so on.
 
“We will do mostly structured deals in commercial projects and look beyond real estate while lending funds,” said Amit Pachisia, chief credit officer at Altico Capital.
 
Altico’s increased focus on commercial projects comes in the backdrop of these projects doing well in terms of leasing deals and developers expanding their commercial portfolios.

 

The year, 2016, saw an all-time high absorption of 43 million sq ft of the office properties and it is expected to get better this year.
 
Altico’s rival Piramal Finance had started lending to commercial realty last year and starter lease rent discounting (LRD) of rent receivables.
 
“In commercial real estate segment, our focus is on pre-LRD stage. This could either be development financing or bridge funding prior to leasing. Our micro-market selection is more stringent and we focus on Grade-A builders,” he said.
 
Altico has executed trades of close to Rs 3,300 crore and disbursed Rs 2800 crore in 2016.

 
 Depending upon suitability of deals,  it has plans to invest Rs 3500 to Rs 4500 crore, Pachisia said.
 
“Besides this, we are also looking to invest additional sums in aligned new segments,” he said.
 
In comparison, Piramal has lent about Rs 12,000 crore to property developers last year.
 
Pachisia said Altico would continue to do secured lending to selective builders which are backed by ring-fenced projects
 
He said, in the last six months, it has had cash realisations exceeding thousand crore.
 
“Besides regular contracted principal and interest repayments, we have had six full and partial exits (prepaid) in 2016,” he said.

 
Private equity firms have set up a number of real estate-focused non-banking financial companies  (NBFCs) in the past couple of years.
 
Piramal Fund Management, Xander NBFC and NBFC floated by KKR and Singapore sovereign wealth fund GIC are some of the prominent ones in this space. Most of these funds lend between 12 to 18 per cent. “There is a requirement of  $15 billion of funds in real estate every year and scope for everybody,” Altico Capital Chief executive Sanjay Grewal said last year.