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First project under last-mile real estate fund wrapped up

The money realised through this investment can be used to support other projects, they said, and help unlock liquidity in the sector and boost core industries such as cement and steel.

By: ENS Economic Bureau | New Delhi |
October 29, 2021 4:19:52 am
mumbai real estate market swamih fundThe Fund, set up as a Category-II AIF (Alternate Investment Fund) debt fund registered with the Securities and Exchange Board of India, provides funding to stalled projects that are “net worth” and where at least 30 per cent construction has been completed.

THE GOVERNMENT-BACKED SWAMIH Fund has announced its successful exit from the CCI Rivali Park Wintergreen project in Mumbai, which was the first beneficiary of the initiative to provide last-mile funding to affordable housing projects that were stalled due to lack of funds.

The exit came five months after homeowners were given possession of completed flats under the Mumbai project. The Fund — Special Window for Affordable & Mid-Income Housing or SWAMIH — was set up in November 2019 with an estimated size of Rs 25,000 crore.

Experts said the exit would embolden the Fund and other private investors to take exposure to projects stuck due to lack of last-mile funding. The money realised through this investment can be used to support other projects, they said, and help unlock liquidity in the sector and boost core industries such as cement and steel.

According to the Union Finance Ministry, SWAMIH has given final approval to 95 projects, sanctioning more than Rs 9,500 crore to complete over 57,700 homes.

It has already completed over 1,500 homes in seven projects and is on track to complete at least 10,000 homes every year, the Government said.

Managed by SBICap Ventures, a step-down subsidiary of State Bank of India, the Fund gave possession of completed flats in the Rivali Park project in May. Spread over seven acres and consisting of 708 units of various configurations, the project is developed by CCI Projects Pvt Ltd.

“A loan sanction of Rs 180 crore was given to the project in February 2020, out of which around Rs 130 crore was utilised to complete the project with an IRR (internal rate of return) of around 12 per cent,” a Government official said.

The Fund, set up as a Category-II AIF (Alternate Investment Fund) debt fund registered with the Securities and Exchange Board of India, provides funding to stalled projects that are “net worth” and where at least 30 per cent construction has been completed.

There are an estimated 4.58 lakh housing units in the stalled category, and the aggregate funding required to
complete them is Rs 55,000 crore, according to a study by SBICap Ventures.

A project is considered networth positive if the value of sold receivables plus unsold inventory is greater than the cost to complete construction and service the Fund’s investment. The initiative was launched to overcome the liquidity squeeze and cash strap situation faced by the real estate sector in 2019.

The Finance Ministry said SWAMIH Fund has one of the largest domestic real estate private equity teams focused only on funding and monitoring completion of stressed housing projects.

“The construction focus ensures that SWAMIH sites have the highest worker density with almost 16000+ labourers. It has worked through Covid times to approve one new project almost every week since inception,” it said.

The Fund is currently active in the Mumbai metropolitan region, National Capital Region and other metros including Hyderabad, Chennai, Ahmedabad, Pune and Bengaluru.

Overall, the SWAMIH Fund has provided preliminary approvals to 139 projects that will help complete construction of further 77,610 houses.

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