Companies turn to AIFs to revive stalled housing projects

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In a bid to revive over two dozen housing projects which are stuck across different metro cities in India, a number of companies are turning to Alternative Investment Funds (AIFs) to give them the necessary funding. These AIFs have so far collected over Rs 2,000 for this last-mile funding.

Most of these projects are located in Delhi-NCR, Bengaluru, Pune and Mumbai and need funds to restart their operations which are said to be web price optimistic.

Customers can now breathe a sigh of relief. With these housing projects getting the required financing and nearing completion, customers will soon get possession of their dream homes.

360 Realtors, a real estate advisory agency said that it is in the last stage of utilising Rs 100 crore of an AFI worth Rs 500-crore for funding residential projects which are stuck. They are expected to carry out these operations by 2022. Its founder Ankit Kansal told Economic Times that they have identified a project each in Noida and Gurugram, and they are expected to sign and close the deals within this month. Their focus will be on NCR as it has a large number of projects which are stalled, said Kansal. 360 Realtors has also entered into a partnership with Rising Straits Capital and together can provide the much-needed funding to projects in NCR, Bengaluru, Pune and Mumbai. The AIF will also purchase actual property stock in bulk in exhausted property projects.

What is AIF?

Indian markets regulator Securities and Exchange Board of India (Sebi) defines AIF as, “a fund established or incorporated in India which is a privately pooled investment vehicle which collects funds from sophisticated investors, whether Indian or foreign, for investing it in accordance with a defined investment policy for the benefit of its investors”.

AIF is a privately collected investment vehicle that collects money from sophisticated private investors or high net-worth individuals (HNI) and differs from conventional investments like stocks, debt securities, etc. AIF comprises private equity, venture capital, hedge fund, and angel fund, etc., and doesn’t come under the ambit of Sebi’s mutual fund regulations. Investors looking into diversification of their investment portfolio can opt for AIFs and they are open for all Indians, which also include NRIs, PIOs, and OCIs, given they meet the eligibility criteria.

Finance minister Nirmala Sitharaman had introduced SWAMIH, a Class II AIF in September 2019, which was later accredited by the Cabinet in November 2019. This fund was created to aid the completion of stalled, RERA-registered affordable and mid-income category housing projects. It has so far committed Rs 17,000 crore and has offered preliminary and ultimate approval to 213 projects across India. Experts opine that SWAMIH has proved to be inefficient owing to its strict guidelines.