IRR for SWAMIH Fund cut to 12% by SBICAP

New Delhi: In a significant move to provide more liquidity to the beleaguered real estate sector, the internal rate of return (IRR) for SWAMIH Fund has been slashed to 12 percent from 15 percent decided earlier.

Irfan Kazi, the Chief Investment Officer of SWAMIH Investment Fund, has made the announcement yesterday that the IRR for the SWAMIH will be brought down to 12 percent because of the “extraordinary circumstances” prevailing in the country these days.

The reduction of 300 basis points in the IRR is seen a significant cut in the rates and will go a long way in making money available for those real estate projects where there is the construction is stalled after completion of major part of the project. 

“We feel that this (rate reduction) has come at an opportune time when the lockdown is being eased out, an early deployment will allow the development companies to restart construction and complete their projects at the earliest possible,” said Shishir Baijal, Chairman & Managing Director, Knight Frank India.

SWAMIH INVESTMENT FUND I Special Window for Completion of Construction of Affordable and Mid-Income Housing Projects.

It may be recalled in November 2019, the Union Cabinet had approved the proposal to establish a ‘Special Window’ by way of Alternate Investment Fund (AIF) for priority debt financing of real estate projects.

SBICAP Ventures was decided to be investment manager for the first AIF established under the 

The first such fund- SWAMIH Investment Fund I -has been set up for the completion of delayed, brown-field, RERA registered housing projects. These projects needed to be in the affordable housing or mid-income category, and must be net-worth positive.

As per a study conducted by SBICAP, there are about 4.58 lakh homes that are stalled and meet these conditions. The funding requirement for these projects is about Rs 55,000 crore.

SWAMIH Investment Fund I has a target corpus of Rs 12,500 crore, together with a green-shoe option of Rs 12,500 crore. The sponsor of SWAMIH Investment Fund is Secretary, Department of Economic Affairs, Ministry of Finance.