DMI Finance, a non-banking financial company, is currently fundraising for a INR10 billion ($155 million; €136 million) special opportunities fund in India.
The fund will have an investment period of three to four years. It will invest in both real estate and distressed assets in India with a ticket size between INR400-500 million. The fund is expected to reach a first close of around INR3 billion within the next month and a final close by March 2018, according to a release.
The vehicle plans to invest more in special opportunities in real estate while it is also open to investing in bank-type non-performing assets (NPAs), or assets involving participation of asset reconstruction companies (ARCs).
“In the last three to four years in the residential space, there has been a significant slowdown in final sales. End buyers have stepped away from markets. Land sales have come almost to a standstill. High-end projects have come down fairly dramatically. The lack of final sales means the cash flow visibility that most real estate developers need in order to service the current levels of debt, is not there,” Shivashish Chatterjee, co-founder of DMP Finance, told a local news report.
On the distressed assets side, Chatterjee sees opportunity created by the INR10 trillion of non-performing assets (NPA) in the banking system and the existence of a newly implemented bankruptcy code. However, the firm will only look at disposals and will avoid turnaround situations.
“Over time, as the bankruptcy code takes hold and as banks become more amenable to selling, we do expect to see more investment opportunities in distressed assets,” he added.
This is the first distressed asset fund launched by the company. In 2013, it bought an equity stake in Alchemist Asset Reconstruction Company. The firm has invested in the real estate financing space for almost nine years. In 2014, it entered the retail housing finance market through DMI Housing Finance. elhi-headquartered DMI Finance was founded in 2008 by former Citigroup executives Shivashish Chatterjee and Yuvraja Singh.