India: Walton Street BlackSoil Real Estate Fund II hits first close at $49m

Photo: Pradeep Gaur/Mint

Walton Street BlackSoil Real Estate Debt Fund II on Thursday said it has made a first close of ₹360 crore and will offer debt financing to largely mid-income, residential projects in the top six cities.

The fund has a target corpus of ₹500 crore, with a greenshoe option of ₹250 crore. Domestic high net-worth individuals (HNIs) and family offices have invested in the fund, which will be fully raised by December. The debt fund is registered with the Securities and Exchange Board of India (Sebi) as a Category II Alternative Investment Fund (AIF).

The Walton Street BlackSoil fund is being raised at a time when construction financing has become a big challenge for developers.

The first fund, Walton Street BlackSoil Real Estate Debt Fund I, was launched in 2018 with a ₹320 crore corpus. It was fully deployed earlier this year and made 10 investments in Bengaluru, Hyderabad and Mumbai, more than 50% of which has been returned, the company said.

“The demand for debt is high given that there is a vacuum for capital for real estate development with banks and NBFCs doing limited lending to projects. Our second fund has a similar strategy as our first and we will do a combination of last mile and inventory funding. From our perspective, we want to take a de-risk position in our transactions rather than a higher yield,” Kaushik Desai, managing partner, Walton Street India Real Estate Advisors Pvt. Ltd said in an interview.

The second fund being bigger will do more transactions and comparatively large deal sizes than the first.

“…The focus of our second fund is to provide financing to developers with proven track records of execution across the mid-income housing sector in our key markets driven by end-user demand, to invest in key in-fill projects with full control over cash flow and visibility on financial closure and completion. We have received a tremendous response from the prior investors in WSBREDF-I for our second fund,” Desai said.

Given that banks are wary to lend, a number of real estate funds are stepping in to fill in the gap, though at a higher cost of lending.

The affordable and mid-income residential segment accounted for more than half of the new launches in the April-June 2021, the firm said.

“With reduced availability of the capital for residential real estate development, the funds generated from the second fund or WSBREDF-II will be deployed to provide financial assistance to developers to ensure consistent cash flow and timely completion of projects,” it said.

Recently, BlackSoil and the former India-based management team of U.S real estate investment advisor Walton Street Capital, LLC acquired Walton Street India’s real estate debt business.

As a result of the buyout, WSBREDF-II is no longer affiliated with or advised by affiliates of Walton Street Capital, LLC.

Since 2013, and prior to the launch of the second fund, Walton Street Capital India and BlackSoil have jointly placed more than ₹1,500 crore of debt capital across 50 real estate transactions.

This article was first published on livemint.com

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.