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The Gap:

Most private equity (PE) funds operational in India originate either from the US or Europe. FDI policies have forced funds to take positions in longer gestation projects. As per the policies, funds with foreign capital are prohibited to invest in projects where the total built-up area is under 50,000 sq. m. or in developments less than 25 acres incase of development of serviced housing plots. This has resulted in most PE players having placed bets on urbanization and migration trends in regions with lower land prices which may in the long run result in higher returns. The longer investment horizon significantly reduces the predictability of projects thereby increasing risk.

Addressing the Gap:

It is well known that the real-estate sector is highly fragmented and that local developers are still responsible for the majority of the new supply in most markets. It is precisely this natural market phenomena where our focus and opportunity lies. Our investment strategy is focused and targeted towards up market shorter development life-cycle residential projects within metros and Tier I cities. We understand that the up market focus will come at a relative higher entry cost but believe it will result in higher margin, higher marketability, higher predictability, and therefore meaningful downside protected returns.

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