Professional real estate investors and private equity funds have struggled to achieve good returns in India.
The primary reason is that the industry is complex and opaque, leaving a purely investment-focused firm with a lot of misses along with their hits, thus reducing average returns.
Very early in our company’s history, we noticed that funding developers was easy, but exiting these investments with good returns was very complex. We decided not to be like other companies that have perpetually struggled with this.
So, we decided to solve it once and for all. In order to reduce risk, we built specialized teams to curate projects from different functional perspectives: a team to assess land-related issues, a liaising team to understand the complexity of the approvals involved in the whole process, a team to mitigate legal risks, a design and product team to evaluate projects and pricing, and an engineering and construction team to handle construction related issues.
We also developed legal and financial control structures to reduce counter-party risks. Our proficiency in real estate allows us to be extremely accurate in our curation of deals and build an efficient portfolio of profitable projects. The largest developers can source capital at lower costs and offer investors lower returns.
The best investments are often with experienced tier-two developers having a passion for excellence, but not the resources as their larger counterparts.
We are able to partner with these developers and use our deep domain expertise to complement their skills.
This way, we can offer additional value to the developer, while enabling our investors to secure higher internal rate of return.
This article was first published on livemint.com.