SWAMIH fund

In news– Recently, the first project under the SWAMIH real estate fund has been wrapped up in Mumbai.

Key updates-

The project was the first beneficiary of the initiative to provide last-mile funding to affordable housing projects that were stalled due to lack of funds.
Managed by SBICap Ventures, a step-down subsidiary of State Bank of India, the Fund gave possession of completed flats in the Rivali Park project in May.
The project was launched in 2010 and stalled due to lack of funds with no hope for desperate homebuyers until SWAMIH investment in February 2020.
According to the Finance Ministry, SWAMIH has given final approval to 95 projects sanctioning more than Rs 9,500 crores which will complete over 57,700 homes.

Impact of the exit

The successful exit would embolden the Fund and other private investors to take exposure to projects which are stuck due to lack of funding.
It would help unlock liquidity in the real estate sector and provide a boost to core industries such as cement and steel.
The money realised through this investment can be used to support other projects.

The Special Window for Affordable & Mid-Income Housing or SWAMIH fund-

It was set up in November 2019 with an estimated size of Rs 25,000 crore.
The Rs 12,500-crore fund, with a green-shoe option of an additional Rs 12,500 crore, aims to provide financing to enable completion of stalled housing projects and ensure delivery of apartments to homebuyers.
It provides funding to stalled projects that are “net worth” and where at least 30 per cent construction has been completed.
It has one of the largest domestic real estate private equity teams focused only on funding and monitoring completion of stressed housing projects.
The Fund is currently active in the Mumbai metropolitan region, National Capital Region and other metros including Hyderabad, Chennai, Ahmedabad, Pune and Bengaluru.
This Fund was set up as a Category-II AIF (Alternate Investment Fund) debt fund registered with the Securities and Exchange Board of India.
The Central Government is the sponsor (the person/entity that set up the AIF) and will have the authority and responsibilities.
SBICAP Ventures Limited is the investment manager of the SWAMIH investment fund.

Alternative Investment Funds (AIFs) & their types-

Alternative Investment Funds are an avenue to pool in funds for investing in private equity, real estate or hedge funds.
In India, AIFs are defined in Regulation 2(1) (b) of SEBI (Alternative Investment Funds) Regulations, 2012.
It refers to any privately pooled investment fund, (whether from Indian or foreign sources), in the form of a trust or a company or a body corporate or a Limited Liability Partnership (LLP).

Types-

Category I AIF are those funds that invest in start-ups or social venture funds, infrastructure funds, SME funds, and so on. The government or regulators consider this category of funds as socially viable or economically desirable.
Category II Funds are those that do not leverage or borrow, other than to meet the day-to-day operational requirements. This category typically consists of Private Equity Funds and Debt funds.
Category III funds typically comprise Hedge Funds that employ diverse or complex trading strategies. By investing in listed or unlisted derivatives, AIF managers try to employ leverage.