IDFC commits $15m to Indian real estate

The investment manager has tapped the Noida real estate market following Altico and Piramal’s earlier investments in the region.

IDFC Alternatives, an Indian alternative investment manager, has made a INR1.03 billion ($15.4 million; €14.5 million) structured credit investment in a residential project in Noida, on the outskirts of Delhi in India.

The facility will be used to make the land payment and fund construction for Sunworld, Vanalika, a residential project in Sector 107 developed by domestic developer Sunworld, according to local news reports.

IDFC confirmed the investment but declined to comment further.

The investment was made from the firm’s new IDFC SCORE Fund, a INR7.6 billion structured credit fund raised last year. The fund targets small and medium-sized residential real estate projects with a typical ticket size of $10 million to $20 million.

The fund expects an internal rate of return of 20 percent from its senior secured debt strategy.

IDFC Alternatives’ previous similar fund, IDFC Real Estate Yield Fund, closed on $125 million in 2014. The fund has been fully deployed in eight investments with three full exits to date.

Noida has proved a popular destination for real estate debt managers. Non-banking financial companies Altico Capital and Piramal committed $59 million and $62 million respectively to real estate development projects in the region in January this year.

“In terms of absorption, Greater Noida is the largest micro-market in NCR [National Capital Region]. Also, while the Noida market has seen a slowdown in sales, Greater Noida, and more specifically Noida Extension within that, has seen an uptake in sales as well as a reduction in inventory overhang over the last year owing to the affordable ticket sizes in this location,” explained Sanjay Grewal, chief executive officer of Altico Capital.

IDFC Alternatives is an Indian multi-asset class investment manager managing over $3.4 billion on behalf of leading institutional investors from around the world.