Walton Street BlackSoil Real Estate Fund hits first close at ₹360 crore
Walton Street BlackSoil Real Estate Debt Fund II announced Thursday that it had completed an initial deal ₹360 crore and will offer debt financing for mostly middle income residential projects in the top 6 cities.
The fund has a target corpus of ₹500 crore, with a greenshoe option of ₹250 million. Domestic high net worth individuals (HNIs) and family offices invested in the fund, all of which will be raised by December. The Debt Fund is registered with the Securities and Exchange Board of India (Sebi) as an Alternative Investment Fund (AIF), Category II.
The Walton Street BlackSoil Fund is launched at a time when home finance has become a major challenge for developers.
The first fund, Walton Street BlackSoil Real Estate Debt Fund I, was launched in 2018 with a ₹320 crore body. It was fully deployed earlier this year, making 10 investments in Bengaluru, Hyderabad and Mumbai, more than 50% of which have been returned, the company said.
“The demand for borrowed capital is high as there is a vacuum for capital for real estate development as banks and NBFCs give limited credit to projects. Our second fund has a similar strategy to our first and we will be doing a combination of last mile and inventory funding. From our point of view, we want to take a risk reduction rather than a higher return on our transactions, “said Kaushik Desai, Managing Partner, Walton Street India Real Estate Advisors Pvt. Ltd. in an interview.
The second fund, which is larger, will carry out more transactions and comparatively large transaction sizes than the first.
“… Our second fund’s focus is to provide funding to developers with a proven track record in the middle income housing sector in our key consumer-driven markets to invest in key infill projects with full control over cash flow and financial close and transparency -diploma. We have received tremendous feedback from previous WSBREDF-I investors for our second fund, “said Desai.
Given banks’ reluctance to lend, a number of real estate funds are stepping in to fill the gap, albeit at higher borrowing costs.
The affordable, middle-income residential segment made up more than half of all new launches from April to June 2021, according to the company.
“If the availability of capital for residential property development is limited, the funds generated from the second fund or WSBREDF-II will be used to provide financial support to developers to ensure consistent cash flow and on-time completion of projects,” it said .
Recently, BlackSoil and the former India-based management team of US real estate investment advisor Walton Street Capital, LLC acquired the real estate lending business of Walton Street India.
As a result of the buyout, WSBREDF-II is no longer affiliated with or advised by Walton Street Capital, LLC.
Since 2013 and prior to the launch of the second fund, Walton Street Capital India and BlackSoil have combined more than ₹1,500 crore borrowed capital for 50 real estate transactions.
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