- Sunil Rohokale, Chief Executive and Managing Director, ASK Group
ASK Group is a diversified financial services group and a leading player in the wealth and investment management business. ASK Property Investment Advisors, a venture of the group, has been set up to manage and advise realty dedicated funds for domestic and offshore clients. Sunil Rohokale, Chief Executive and Managing Director, ASKGroup, elaborates...
Innovative forms of investments are replacing plain equity like themed funds and construction finance. Will this help the realty sector, and how?
Even if there is slow sale, developers continue as they know their equity is installed and they are not really hand to mouth where they have to give discounts. But there are people who do not have equity and have debt that is high; so whatever money is coming in goes in repaying loans. Hence, projects get slowed down.
What funding options do you offer to builders and developers? Over the past two years, how much funds have you raised for the real-estate industry?
We started raising funds in 2009; so far, we have four real-estate funds. The first fund was equivalent to Rs 317 crore; the second, in 2011 that got closed in 2012, was Rs 1,000 crore; and then we had another fund that we closed in 2016 that was Rs 1,400 crore. We have also raised $100 million as off-shore funds; the first three funds are Indian funds and the fourth was off-shore. The capital we gave the developer is at the early stage for acquiring the land that has got title. All the money that has been raised is only for residential real estate. Here, we only focus on five cities: Mumbai, Pune, Bengaluru, Chennai and Delhi NCR. We provide capital to the developer in the form of equity at the project level. We give developers a two-to-three-year non-convertible debenture.
To which segments within the real-estate sector do you prefer lending?
We have invested in 20 projects worth Rs 4,000 crore.
We focus on the mid-segment where Rs 4,000-5,000 per sq ft is the apartment price, typically 1,100-1,500 sq ft houses, costing up to Rs 1 crore, and we invest for three to five years in these projects. Of the 20 projects invested, we have exited six full projects and the returns are between 25 and 30 per cent.
Realty funds are known for customisation of transactions and are adapted to the needs of developers...
Developers actually want equity money. Some lenders give money against inventory, which means developers whose project is nearing completion or is completed have taken loans for completion. The other variation we see is lenders like us who are private equity partners that invest at an early stage. If the developer feels, after some years, that he is doing well, he changes the equity into debt as it saves interest rates from 15-16 per cent to 13-14 per cent.
For companies who want to expand and diversify their business, what is your funding option?
We will be now focusing on international money raising; of course, we will raise domestic money to some extent too.