Mumbai-based Nisus Finance Services Co (Nifco), which manages a real estate investment fund, is looking to deploy around Rs 140-150 crore in four investments in the next six months through its proprietary investment product.
Currently, the company has one deal in Mumbai and another two in Bengaluru. Across these four transactions, it will invest around Rs 120-140 crore. As reported, the investment could go up to Rs 150 crore, and the transactions are roughly in the range of Rs 30-35 crore.
The fund is invested only in residential projects, and Nifco will make the investment through its proprietary product called StruBB – short for structured buyback. The firm initiated the product after having seen the shortfalls of the traditional NCD (non-convertible debenture) model of structured financing.
StruBB aims at collateralising specific inventory in a project, generally a late-stage, ongoing project, which has a significant amount of buyer interest already.
The product allows the investor to acquire ownership, mortgage and liquidation rights for the inventory at a deep discount. In case of default in payments, the fund can go out and sell that inventory at whatever price it wants to for recovering its investment. The firm looks for residential projects that might already have a construction loan and which need last-mile funding or money for other uses in the project that banks do not lend against.
The StruBB product offers 2-3 per cent higher returns than the traditional NCD product, whose returns usually range between 18.5-19.5 per cent. Nifco has already invested around Rs 50 crore through StruBB in two investments in the past six months and is focusing on select markets such as Mumbai, Delhi NCR, Bengaluru and Chennai.