EXECEDO REALTY FUND - I (ERF - I)
Excedo Realty Fund - I ("Fund") is an opportunistic private equity real estate fund registered with the Securities and Exchange Board of India (SEBI). The Fund is set up as a trust established under the provisions of the Indian Trusts Act, 1882 by Athamus Venture as a Settlor in terms of an indenture of trust dated October 22, 2011 and registered in accordance with the provisions of the Registration Act, 1908. IL& FS Trust Company Limited is the Trustee of the Fund. The Trustee has appointed Athamus Venture, as Fund Manager of ERF-I, vide an Investment Management Agreement dated October 24th, 2011.
ERF-I shall have a limited life having a term of 6 (six) years from the Final Closing (the “Term”). The Board may extend the Term by 1 (one) year each up to a maximum of 1 (one) times, provided that a Special Resolution is passed by Investors in favour of such extension of the Term.
ERF-I shall invest in real estate projects in India in the development of townships, housing, built-up infrastructure and construction development projects (the “Target Sector” ) in India (discussed hereinafter in greater detail) as per the FDI Policy and applicable laws. The currency of investment in the Fund is denominated in Indian Rupees (“INR” ). Investments by the Fund in SPVs (incorporated in India) may be made in the form of equity shares, compulsorily and mandatorily convertible preference shares, and compulsory and mandatorily convertible debentures, in accordance with applicable Laws respectively.
While the proposed corpus of the Fund is Rs 450 Crores, follow on rounds of funding are envisaged to sustain the investment momentum, leading to an overall Fund size of 600 Crores, pursuant to a green shoe option of Rs. 150 Crores.
Advantages of Integrated Model
Fund Managers development arm, Autus Developers Private Limited shall provide development service on cost basis only
ERF-I Shall participate in entire value chain of returns
Fund has a term of only 6+1 years
Cash flows to the investors typically by 3rd year itself
Exits from investment is 100% control of ERF-I
Governance, Regulations And Transparency
Fund Manager ERF-I is registered with SEBI as alternative investment fund category II
ERF-I Has to compile with SEBI AIF Regulation
IL&FS Trust Company Limited in its capacity as trustee is the legal owner of ERF-I taking care of investors as fiduciary, acting as a watch dog of the Fund Managers.
Independent Board: Athamus Venture Strives to keep its board independent by appointing 50% members.
Independent Investment Committee: Fund Manager has consciously decided to keep 50% members of the Investment Committee of ERF-I to be independent of the Fund Manager to ensure transparency in decision making, monitoring and observance of Investment Management Agreement.
A key contributor to the ability to generate deal flow is the management’s breadth and depth of industry relationships, Athamus Venture’s track record of engagement with investee companies and the strength of the team Athamus. The Fund’s extensive private equity experience as well as the management’s reach and relationships with industry participants will provide significant advantages in pursuing the investment strategy. Athamus Venture has, over the years, established a strong network with financial advisors and investment bankers, thereby providing it fast and first cut access to several opportunities across sectors. In addition to the above, the Fund also has access to an in-house team of business development professionals who are dedicated full-time towards sourcing market opportunities.
The Fund will adopt and undertake a rigorous due diligence process and financial evaluation. The Investment Advisor’s significant experience in evaluating a number of deals over the past years has provided us insights on due diligence aspects which are specific to emerging sector economies. By virtue of its network of relationships, the Fund has preferential access to legal counsel, “Big Four” accounting firms, as well as other advisors to assist in identifying material risks and validating key assumptions. The Fund will engage experts to review key risk areas, including legal, tax, accounting, business, technical and operational matters. A detailed management due diligence will also be followed especially in management buyout cases to assess the capabilities, past performance and expertise of the management to provide fresh growth impetus to target investments.
Investment Advisory Committee Recommendation And Investment Committee Approval
After preliminary evaluation of deals, specific deal opportunities are discussed in regular meetings (pre Investment Advisory Committee approvals) by the investment teams. The primary objective of such discussions is to obtain preliminary feedback from the team regarding the deal as well as to seek approvals and guidance on specific issues e.g. structures, appetite for particular sector, management reputation, etc. The Investment Advisory Committee (a committee constituted at the level of the Indian Advisor) follows a rigorous screening test which tests the investment opportunity on a variety of parameters e.g. conformity with investment objective, specific business dynamics, cyclicality conditions, financial parameters, portfolio management strategy, capability of existing management of portfolio company, proposed exit strategy, etc. While the deal team makes an investment proposal to the Investment Advisory Committee, it is accompanied by detailed comments and review by the Chief Risk Officer of Indian Advisor, who provide an independent view on the investment opportunity. The Investment Advisory Committee accordingly puts forth recommendations to the Fund’s Investment Committee and Board for their approval.
The Fund seeks to invest in companies which are capable of acquiring land for development at early stage and true market price. Besides capital for growth, where required, the Fund will assist its Portfolio Companies in identifying, evaluating as well as managing the next growth wave e.g. making bolt-on acquisitions, brownfield expansions, strengthening management, accessing capital markets, etc. The Fund will actively monitor the performance of the Portfolio Companies and seeks to implement a detailed MIS report for each of its portfolio companies. In addition to the above, the Fund will have periodic portfolio review meetings, wherein the performance of the investment is discussed and reviewed in detail.
The Fund’s exit strategy is to seek to time exits opportunistically using a mix of divestment strategies including IPOs, sale of projects, strategic sales etc. The Fund ensures that the exit, along with ensuring optimum returns for its investors, is also in the best interests of the Portfolio Company.