Friday, May 21, 2010

Aditya Birla Real Estate Fund

This is a Venture Capital Fund
FUND DETAILS:Fund Size: Initial: Rs 750 Crs., Green Shoe Option: Upto Rs 250 Crs
Target Return: Not Available Italic
Hurdle Rate: 10% IRR per annum
Min Investment: Individual: Rs 25 Lakh; Corporate/ Insti. Investor: Rs. 10 Crs

Draw Down: 20% (Notice period is 15 Days)
Management Fee: 3%, One time charge, 2% p.a. of total commitment amount.
CARRY: 80:20 ratio (Investor : Investment Manager)
Investment Horizon: 6Years Extension- 1+1 years
Investment Tenure: 3 Years from date of final closing

TAXATION: Fund Income would be in the nature of dividends, interest income and capital gains at the time of the sale of investment. Interest income arising from portfolio companies or on short-term investments by fund would be taxed at the maximum marginal rate.
Tax Counsel- KPMG India Pvt Ltd

INVESTMENT MANAGER:Fund will be managed by Birla Sun Life Asset Mgt. Company Ltd
Advisory Team:
1. Mr Shashi Kumar, Head Real Estate having 20 years of experience.
2. Mr Jagannath Shetty, CFO having 20 Years of Experience.
3. Mr Shekhar Rangaraj, Head Business Development, more than 20 Years of experience.

LEGAL COUNSEL: Nishith Desai Associates
CUSTODIAN: Deutsche Bank AG

· Aditya Birla Real Estate Fund is registered with SEBI as Venture Capital Fund. Fund will be managed by Birla Sun Life Asset Mgt. Company Ltd.
· Fund plans to make investments in unlisted (some times in listed also) real estate firms through equity, equity-related and debt instruments.
· Fund will focus on residential projects and will mainly look at deals at project level, but may also look at investments at an enterprise level in privately held companies.
· Aditya Birla Group is regarded for its corporate governance & experience in infrastructure sector in India.
· Aditya Birla Group’s Aditya Birla Private Equity- Fund I successfully raised Rs 675 Crore from domestic market at the time of First Closure recently.

INVESTMENT STRATEGY:· The fund proposed to invest in realty and realty related business in west & south India.
· Main Focus on Residential Realty.
· Investment at “Land Cost” Stage with well performer developers.
· Single Project Exposure should not increase 25%. Single Group Exposure should not increase 40%. Similarly they have set limit for Single City, Metro Exposure etc.

· HDFC Property Fund- HDFC India Real Estate Fund (HI-REF)
· DHFL Venture Capital Fund - promoted by Dewan Housing
· Kotak Mahindra Realty Fund
· Kshitij Venture Capital Fund - a group venture of Pantaloon Retail India Ltd
· India Advantage Fund- promoted by ICICI Bank

Aditya Birla Private Equity- Fund I Portfolio:
· Anupam Industries Ltd, Rs 50 Crs in February, (a Gujarat-based makers of material handling equipment).
· Bombay Stock Exchange (BSE), Rs 21 Crs

FUND ANALYSIS AND RECOMMENDATION:Due to economic slow down, the price of properties has dropped significantly. Now the world economies are on recovery path. The people who deferred their purchases are now actively scouting for homes in both low and high cost segment. The builders have also well responded- Tata homes has sold recently premier class flats for more than Rs 4 Crs per unit after selling low cost nano homes in Mumbai suburb.
This fund will invest in west and south India like Mumbai, Pune, Hyderabad, and Bengaluru cities where either the demand is slightly more than supply or at least equal. Also, the fund will enter at Land Cost Stage and as per news in the market will probably exit after booking of the project but before final construction and hand over to the customer. The Fund has not disclosed its Target Return but expected to perform well.
On the basis of above discussion and Aditya Birla Group’s past experience in PE, Investor may invest in this Fund. However, the investment commitment size should not be too high as investment in the Venture Capital Fund hold more risk.
AUDITORS: S.R. Batliboi & Co.


Anonymous said...

Dear Experts,

I am having 25 to 30 Lacs spare with me for atleaset 5-6 years. My Financial consultant suggest me to go for RE Private equity fund which are available in to the Industry. I have gone through Two Products, 1. is Birla Real Estate PE & India Advantage from ICICI.

I think both groups are realialbe as far as my understaning is concern.

Return wise : I would like to go for ICICI becoz group has Fast Grouth.

Reliability & Stability Wise : Birla will be in choice as history says.

I am confused, would you please advise me what to do??


Satish Bhalara

Investor Knowledge Zone said...

Yes, both groups are reliable and no need to worry. Aditya Birla Group is more stable and known for their corporate governance where as ICICI Bank Group has much exposure in SME Finance (which develops the relations with small growing companies).

In my view, you may go with "Aditya Birla Real Estate Fund".

You may also go with “Emerging India Fund” which is managed by ICICI Investment Management Company Limited. ICICI Group has committed to invest 10-15% of the Total corpus. This makes it attractive and shows the commitment of the group.

- Investor Knowledge Zone

Ak said...

What is the kind of return that we can expect from Aditya Birla Real Estate Fund?

Investor Knowledge Zone said...

Dear Mr AK

As per the nature of the Venture Capital, past performance of the Aditya Birla Group in this area and the experience of the team involved, we can expect an Internal Rate of Return (IRR) between 30%-45% p.a. In simple term, the actual return may vary between 18%-30% p.a.

Anonymous said...

I have invested in Birla real estate fund, but April report of birla real estate is very shocking!

I like your advice @ further investment or should i opt out


Investor Knowledge Zone said...

Dear Mr Atul
I do not have ‘April report’ of Aditya Birla Real Estate Fund as they only provide information to their investors only. Also there is no such socking information available in the market.

It is true that real estate is facing problem. The prices of properties have been decreasing in Mumbai/ Mumbai suburb and other cities in India. At the same time interest rates are going up making worst scenario for these companies. But this is a long term investment and situation will change later.

The higher interest rates (and banks also not willing to reschedule their loan payment by real estate companies) make real estate companies cash dry and they start looking for cash to meet their commitment, even at higher rates. This makes them attractive for Venture Capital Funds.

In my view, the return of this fund will be reasonable. You may opt for further investment.

- Investor Knowledge Zone

Seth said...

I have invested in this fund and now have to pay 5lac before 31st aug. but right now i am not in a position to pay the money and thus want to Exit from the fund.

Can you please tell me the way how to EXIT from the fund.

Seth said...

I have invested in Aditya Birla Real Estate fund and have to pay 5 lacs before 31st Aug. but right now i am not in a posiotn to pay more. I want to Exit from the fund and asked my RM but they told me as its a close ended fund you can't exit.

Can anyone please tell me how to EXIT from the fund as i don't have enough funds now to pay them.

Investor Knowledge Zone said...

Dear Mr Seth

There is no direct way to exit from the fund as it is a closed ended long term instrument. Even there is no exchange listing also as per information available with me.

Only one solution is, to make some one ready to buy your share of investment in the fund.

You can convince someone to buy your share of investment.

But in my view, you must talk to the PE Investment Manager: Aditya Birla Capital Advisors Pvt Ltd. They always have a pool of investors. They may arrange some one to buy your share of investment in the fund or they may give you some other acceptable solution.

The Aditya Birla Group is known for its corporate governance and investor friendly behavior. Eminent persons like Mr Bharat Banka, CEO are there.

So, contact the investment manager, they will provide you solution.

-- Investor Knowledge Zone

Anonymous said...

I have invested in ABRE and post the first 2 calls there has been no investment sought by fund. It more than an year that there is no further demand. What we paid is just 40% of target. The fund duration is 3-4 years and they are expected to starting returning capital this year. Do we know if this is normal not to even call for complete subscription> Is everything alright with ABRE ? There is no proper communication from fund ?

Investor Knowledge Zone said...

Dear MR Anonymous (dated 14.01.2013), This is a good venture capital.....It seems "You have not received demand for capital contribution since long from Asset management company". Yeah its quite common. They will ask for any new contribution only when they finalize some investment deal. So do not worry. Also these VCs do not communicate on regular basis. But if you are not getting Account statement etc, contact their office and ask for the same. They will provide you account statement and portfolio details time to time.

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Anonymous said...

i have invested in aditya birla real estate fund in august 2010. during the financial 12-13 year i have received 31233/- directly in my accounts. However as per statement received for the f.y 12-13, it has been given that total income from VCU and NON VCU income is Rs. 68238.49. In this regard i would like to know the tax treatment as which one would be taxable in my hand the amount directly credited in my account or the income as per statement.
kindly help me out


bhupinder singh oberoi said...

What if not in position to pay third demand.what happens to money we have already paid Thanks

Anonymous said...

I have already paid three instalments. When will they ask for the rest two instalments? When will they start paying us back the return and when will it be completed/ How many fold will be the return? Why the company does not reply to our curies?

Investor Knowledge Zone said...

Dear MR Bhupinder Singh,
you have to pay all committed amount as per your agreement..otherwise you have to face penalty. This is a close fund so there is no exit route.

Now in case you are not in position to pay rest, talk to venture capital personnel directly and tell the issue. They will find a new investor for you or suggest you how to deal with situation.

Abhinav Khandelwal said...

can i take loan or overdraft facilitu on the units of Aditya birla real estate fund.

Abhishek Patnaik said...

Hello Sir,
I have already paid 4 installments of 5lkhs each. One more to go. I think this year they will ask for the final installment. I just need to know, when will I start getting my return and what would be the approx.rate of return as per current market status.
Date of Commencement-27th sept.2010

Thank You


Sanjay Sonawani said...

I have fully paid the calls, i.e. 25/- lakh. Now how long I will have to wait for the returns? I have received petty amounts from Aditya Birla as share either from interest earned or profit share outcome of exit from some properties. However it has been petty and about 4 years have been elapsed. Can someone tell be when I will get back my investment with returns and what I can expect to the best?

Anonymous said...

What is the status of Aditya Birla Real Estate Fund I, where I have invested. What is the value of the investment of 25 lakhs which has been made over a period. When can we expect to receive the redemption proceeds.

Sanjay Sonawani said...

Dear Sir, I have invested in Aditya Birla Real Estate Fund-1. I am as yet no knowledge when my entire investment with profit will be returned and approximately what profit I can expect on total investment of Rs. 25 lakh. I used to receive some amounts as share from the interest earned or some profit made but the amounts have not been as expected. Can you please guide me on this issue?


Anonymous said...

Aditya birla real estate fund is delaying in repayment to investors. Panic is spreading.

Investor Knowledge Zone said...

@ Mr SANJAY Sonawani,
there is no unusual as product is designed like this. The fund total tenure is (6+1+1= max 8 years). They distribute normal treasure incomes to the clients on regular basis when they earn which is you are receiving.

On or before fund tenure of max 8 Years (whenever they decide) they will start selling investments and will return your capital investments first. After capital return, they will share profit as per agreement with you. Even they will intimate you the nature of payments made to you.

In my view, they may start capital return from next year onward. So, please wait till the time.