Sponsored by the Ministry of Finance and managed by the SBICAP Ventures Limited, the Rs 15000 crore government-backed SWAMIH ( Special Window for Affordable and Mid-Income Housing) Fund has given a commendable performance over the last three years. by helping complete a large number of stalled housing units and in the process unlocking Rs 35000 crore liquidity. In an insightful talk, Irfan A Kazi, Chief Investment Officer, of SWAMIH Investment Fund throws light on the various aspects of this Alternative Investment Fund, ranging from its operational spread, performance, the strategy behind its success, and the way forward for this last-mile financing platform for affordable and mid-priced housing. Vinod Behl
On the size of stalled /stressed projects inventory
The size of the inventory of stalled and stressed residential projects was determined by a study commissioned in 2019 by SBICAP Ventures Limited, which manages the SWAMIH Fund. The study done by PropEquity real estate research firm had put the number of stalled/stressed projects at 1500 with estimated 4.58 lakh housing units. These stuck units require aggregate funding of Rs 55000 crore for completing them.
On Mandate of SWAMIH Investment Fund
Ours is the only social impact real estate fund. It is targeted at the affordable and mid-income housing categories. There is a clear mandate to complete the construction of stalled, brownfield projects which are net worth positive and are in need of last-mile funding to complete construction These projects have to be RERA registered. Moreover, we can invest only in profitable projects. We are here to complete housing projects and not to pay any penalties in the form of interest on delays to home buyers.
On Operational Spread of the Fund.
The fund has a pan-India spread across 30 cities in India including Tier 1 and Tier 2 cities. Most of the fund spread is in the National Capital Region (NCR) and Mumbai Metropolitan Area (MMR) where we have the majority of the stalled projects. In the NCR, we have 49 such projects with a deal size of Rs 6020.6 crore whereas, in MMR, there are 39 projects with a deal size of Rs 3856.6 crore. Our target is to complete 80-81 K homes in the next 3 years
On Fund Performance
We have so far given final approval to 132 projects having 83067 units with a deal size of Rs 13974 crore. Over the last 3 years, we have been able to complete 20577 homes. We managed to complete the construction of 26 housing projects where no one was interested in financing them. We have handed over 11 projects, recovered our money, and given returns to the government.
On Strategy Behind the Success of the Fund
We have a focused strategy with sound control mechanisms to fast-track, the completion of stalled housing projects, and this has paid us good dividends. As a strategy, we have limited reliance on sales/collections for the purpose of project completion. Moreover, the collections from buyers are fully utilized for project completion. We are focused on the calibrated pace of construction. There are no lump sum fund disbursements made by us. We disburse money against construction progress to ensure the completion of projects. Afterall last mile funding can’t be stuck in the last mile
We have project accounting operations with a forward-looking analysis of project cash flows and a complete business continuity plan. We have a project monitoring consultant (PMC) on-site and there is a virtual CFO control with our team. mates in the role of CFOs. We make direct payments to contractors and vendors. All these factors have contributed to our success
On Way Ahead For SWAMIH Fund
We have raised Rs 15000 crore and have so far sanctioned Rs 10000 crore whereas Rs 5000 crore are yet to be deployed. In line with our focus on fast-tracking project completions, we are looking at more projects. Going forward, we will be completing a minimum of 20000 homes per year…