Essel Finance nears the close of its second CRE debt fund

Essel Finance continues to look at the residential sector despite the intense competition in India.

Essel Finance, the private equity arm of India’s Essel Group, is approaching the first and final close of its second real estate debt fund, Asset 2, on Rs 300 crore ($44.8 million, €40 million), in September this year.

The four-year close-ended fund was launched in May and targets a 20 percent IRR with a focus in residential projects. It uses a senior secured debt strategy with a typical investment size of Rs 50-70 crore.

India_rupees-120x120“We have started raising money and have gotten good response from investors,” Abhinav Bhushan, chief executive of private equity told a local press. “We continue to remain focused on investing in affordable and mid-income projects. When the market is stagnant, it is better to have a conservative strategy.”

The fund attracts investments from domestic investors, particularly high-net worth individuals, the managing director of Essel Finance, Amitabh Chaturvedi, told Real Estate Capital.

The fund manager closed its first real estate debt fund, Asset 1, in December last year. It took only eight months to raise Rs 249 crore in their first and final close. The fund also focused on residential projects in India and has been fully deployed to-date. It has made eight investments and has exited from its investment in Parsvnath Developers Ltd’s project in Gurgaon, according to the local press report.

Essel Finance refused to comment on its previous investments.

The Indian real estate debt market is competitive with Indiabulls Alternative Investments Ltd launching a Rs 1000 crore new fund and IDFC launching its Rs 730 crore second real estate debt fund this year.

Essel Finance is one of India’s leading private sector financial services company under the Essel Group. Essel Group has a foothold in entertainment, media, packaging, infrastructure, education, precious metals and technology sectors.