Location: Mumbai

Sundaram Alternates launches Sundaram Alternative Opportunities Series - High Yield Secured Real Estate Fund III. The fund is a 5-year close-ended Category II Alternative Investment Fund (AIF) and is currently open for subscription.

The Fund will invest in high yielding debentures and mezzanine securities of Indian entities backed by real Assetss that may include real estate, logistics, hotels and healthcare facilities. Investments will predominantly be backed by hard real estate collaterals, access to cash flows and other securities designed to protect capital and return attractive IRRs on a gross basis. The fund will invest predominantly in South India with opportunistic investments in Maharashtra and NCR.

Commenting on the launch of the fund, Sunil Subramaniam, Managing Director, Sundaram Asset Management Company said, “Sundaram Alternative Opportunities High Yield Secured Real Estate Fund III will allow investors to take advantage of the attractive opportunities in the real estate space. Supported by policy makers, and driven by transparency and returns, the Indian real estate sector has attracted inflows from foreign institutional and private equity players. There is a growing requirement of space from education, healthcare, e-commerce, and logistics sectors. Residential real estate is also expected to grow significantly, with the central government's aim to build 20 million affordable homes by 2022. By 2025, the real estate sector is projected to represent 13% of India's GDP. The time is ripe for an entry into this space.”

Vijayendiran R, Chief Executive Officer, Sundaram Alternates said, “Built on the foundation of our two existing real estate funds and leveraging the expertise of the Investment Committee and the Sundaram Group, the fund will invest in secured high yield deals - self-liquidating real estate projects, and those with secured Assets cash flows, backed by commercial Assetss and other collaterals with back-ended redemption structures. We remain prudent with our investments yet see attractive opportunities ahead of us - new deal opportunities, a readjustment of inventory supply, and a resurgence of re-financing - on the back of COVID disruptions.”

The fund's target size is Rs. 750 crores (plus a green shoe of Rs. 250 crores). Minimum investment in this fund is Rs. 1 crore. Karthik Athreya is the Head of Strategy (Alternative Credit) and the fund will be managed by Kumaran Chandrasekaran. The fund is open for subscription to domestic and international sophisticated investors.

High Yield Secured Real Estate Fund III: An opportunity

1. Opportunistically seeks to invest in cash generating RE Assetss and selectively acquire portfolios of stressed / distressed Assetss / secondary debt securities / NCDs from stressed financiers.
2. Instruments will be secured by our robust underwriting criteria with multi-layered cash and hard Assets security covers.
3. Predominantly structured self-liquidating investments that yield periodic income and return capital over the tenure of the instrument.

The sponsor of the fund is Sundaram Finance. The fund has a strong Investment Committee (IC) that comprises of senior management and seasoned professionals from the industry. The Fund also leverages on the strong foothold that Sundaram Home Finance has in the real estate space to access and assess developers. The fund benefits from the track record, developer network and industry experience that the Investment Committee and the team bring to the table. The investment team has a combined experience of around 3 decades in the space.

Sundaram Alternates currently manages two real estate funds. With a gross portfolio IRR ~19%, SA's High-Yield Secured Debt Fund I has repaid ~61% of capital in less than 3 years since final closing. The fund has been distributing interest income quarterly to investors and has continued to do so despite the challenging Covid-19 environment. The second RE fund, High-Yield Secured Debt Fund-II, was recently closed and is currently in the phase of active portfolio construction. The Fund has already distributed income amounting to 10.3% of drawn capital to its investors as interest coupons over the last 1+ years.

About Sundaram Alternates

Sundaram Alternate Assets Ltd. (SA) is a 100% subsidiary of Sundaram Asset Management Company Limited (SAMC), that caters to investment needs of high net-worth individuals (HNIs) through their PMS and AIF offerings. SAMC is a wholly-owned subsidiary of Sundaram Finance Limited, a leading non-banking finance company in India.

Our fund management team has over three decades of experience in creating wealth for investors in the real estate and equity spaces, and our strategies are built on new-age industry practices, sound operating models, data-backed research, and transparency - to give your wealth the edge it needs.

Disclaimer: This note is produced for information purposes only and not a complete disclosure of every material fact, and terms and conditions. It does not constitute a prospectus or information memorandum or an offer to buy any securities or other investments. Please read the fund documents carefully before investing.

This release featured in:

1. The Economic Times
2. The Economic Times Markets
3. The Hindu Business Line
4. VCCircle