Sundaram Alternates Assets plans to raise Rs 1,500 crore through its fourth real estate credit fund. The fund will focus on secured real estate investments, particularly self-liquidating residential projects. The fund will allocate 70–75 percent towards South India micro-markets and 25–30 percent for tactical investments. It targets deals below Rs 100 crore, with expected returns of 18–22 percent.
Sundaram Alternates Assets, a subsidiary of the esteemed Sundaram Group, is strategizing to generate funds up to Rs 1,500 crore through its fourth real estate private credit fund, the RE Credit Fund IV. This visionary fund will be dedicated to capitalizing on the growth and unique opportunities within the real estate sector. It aims to provide investors with access to a well-diversified portfolio of secured real estate investments, with a particular focus on self-liquidating residential projects.
The fund's objective encompasses a total targeted capital raising of Rs 1,500 crore, which also includes an option to exceed the target by Rs 750 crore. This will empower the fund to explore additional opportunities that align with its investment philosophy. With an impressive track record in the sector, Sundaram Alternates Assets has successfully deployed over Rs 2,000 crore across three prior funds over the span of six years. These investments have generated a commendable average gross portfolio return of 18–20 percent. The reliability and performance of Sundaram Alternates Assets have led to the continued support of repeat investors who have consistently entrusted their capital to the company since 2017.
The fund's investment strategy will primarily focus on self-liquidating projects, with an allocation of approximately 70–75 percent towards key micro-markets in South India. These projects offer secure cash flows and downside protection, ensuring stable income streams for investors. The remaining 25–30 percent of the allocation will be directed towards tactical and opportunistic investments that aim to deliver enhanced returns and bolster portfolio performance. The fund will specifically target deals below Rs 100 crore, offering attractive risk-reward dynamics and diversification. The aim is to achieve gross deal returns ranging from 18 percent to 22 percent on a senior secured basis, reflecting the fund's commitment to generating substantial value for its investors.
To effectively manage credit risk, the fund will structure principal and interest recoveries on a quarterly basis within a tenor of 3–4 years. This meticulous approach ensures efficient management of the fund's credit portfolio and optimizes the potential for growth in the rapidly evolving real estate sector. Given the optimistic outlook for the real estate market and the sector's robust performance in recent months, the RE Credit Fund IV endeavours to create a predominantly growth-oriented portfolio. By fostering key relationships with developers, the fund aims to capitalize on opportunities in mid-market residential, hybrid, and commercial projects, offering investors attractive secured returns in these segments.
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