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Govt-backed SWAMIH returns 25% capital with 17 full, 29 partial exits with project deliveries

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MUMBAI: Government-backed and SBICAP Ventures-managed last-mile financing platform, Special Window for Completion of Construction of Affordable and Mid-Income Housing Projects (SWAMIH I), has returned over 25% of drawn capital to its investors owing to faster completion of stuck housing projects across the country totalling over 26,000 apartments.

Designated as a category II alternative investment fund, it was introduced by finance minister Nirmala Sitharaman in September 2019. This initiative emerged in response to escalating worries about stalled projects adversely affecting homebuyers and posing potential risks to the banking system.

“We have done almost 17 full exits and 29 partial exits, so about 46 of our projects out of over 100 investee projects are witnessing completion and even commenced exits as project completion happens in phases. Over 25% of the drawn capital has been returned to investors during the commitment period stage itself,” Abdul Kader Suriya, interim chief investment officer-SWAMIH Investment Fund, SBICAP Ventures, told ET.

India’s largest social impact fund’s investors include the government, which is the major sponsor to the fund, State Bank of India (SBI), Life Insurance Corporation of India (LIC) and HDFC.

The fund has so far delivered over 26,000 apartments that were part of stalled projects to homebuyers and is looking to complete around 65,000 homes out of its current investment portfolio of over 100 such projects.

“Of the total fund size of Rs 15,531 crore, we have committed over Rs 10,900 crore to our portfolio of investee projects. And, with the current portfolio, which is over 100 projects, we are looking to complete around 65,000 units. The fund expects to complete at least 20,000 units per annum from next year,” he said.All investments made by the fund are fixed at 12% internal rate of return (IRR) based on the standard contract terms as it does not price it differently for different deals. The fund has disbursed money to over 100 of these projects.“Disbursements keep happening as and when required. But sometimes, as SWAMIH invests part of sanctioned funds and the project sees progress, it gives a renewed sense of confidence among homebuyers, and we may not need to infuse incremental capital any more in such projects. This is also good as we can allocate the same capital to other projects where it is required and create maximum impact,” Suriya said.

With Rs 10,900 crore already committed to the current portfolio, according to Suriya, the fund has dry powder of over Rs 4,500 crore until its agreed investment commitment period of December 2024. It has an active pipeline for closures and is expecting to soon close 15-20 new investments.

The fund has so far received over 1,400 investment proposals and only a few of these were shortlisted as the fund undertakes intense transitional due diligence before investing and is equally involved in project monitoring post investment.

“For both pre investments and post investments, our measures are very stringent because these are the projects with some legacy issues. We make project payments directly to the contractors or service providers via escrow accounts, and ensure the payments are only cleared based on bills and physical progress,” Suriya added.

According to him, this kind of rigorous and involved asset management spearheaded by SWAMIH is fast becoming an industry norm.

SWAMIH’s investee project portfolio is spread across 19 cities including key cities such as Mumbai Metropolitan Region (MMR), Delhi-NCR, Bengaluru and Chennai as well as tier-2 cities such as Dehradun, Coimbatore, Jaipur and Nashik.

Last December, the Indian government invested over Rs 5,000 crore in this fund, taking its final close to Rs 15,530 crore. This is amongst the biggest corpus raised by any funds in the country. It has been a crucial part of the measures taken up by the government to infuse liquidity in stressed projects to help homebuyers across the country get delivery of their stuck apartments.

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