Download - Milestone Domestic Scheme
MILESTONE DOMESTIC SCHEME III (MDS III)A Real Estate Fund with Equity like Returns & Debt like Security
PAGE NO.
FUND SUMMARY 1-3
MILESTONE CAPITAL - OVERVIEW & PAST PERFORMANCE 4-6
STRUCTURED / MEZZANINE FUNDING - OVERVIEW & RATIONALE 7-10
FUND - STRUCTURE, INVESTMENT PROCESS, INVESTMENT PHILOSOPHY & TEAM 11-14
RISK, MITIGANTS & INVESTOR PROTECTION 15-16
APPENDIX 17-23
DISCLAIMER: THIS PRESENTATION IS INTENDED ONLY FOR THE BENEFIT OF POTENTIAL INVESTORS TO WHOM THE PRESENTATION IS MADE OR DELIVERED FOR THE PURPOSE OF CONSIDERING A POSSIBLE INVESTMENT IN THE MILESTONE DOMESTIC SCHEME III (’The Fund’). THE PRESENTATION IS NOT AND SHOULD NOT BE DEEMED TO
CONSTITUTE AN OFFER TO INVEST OR A SOLICITATION OF AN OFFER TO INVEST, TO OR FROM THE PUBLIC IN GENERAL OR TO OR FROM ANY PERSON OTHER THAN THE PERSON TO WHOM THE SAME IS ADDRESSED.
ANY REPRODUCTION HEREOF IN WHOLE OR IN PART, OR THE DISCLOSURE OF ITS CONTENTS OR THE DISTRIBUTION OF THE PRESENTATION, WITHOUT THE PRIOR WRITTEN CONSENT OF MILESTONE CAPITAL ADVISORS LIMITED, IS PROHIBITED.
THE CONTENTS OF THE PRESENTATION ARE PROVISIONAL AND MAY BE SUBJECT TO CHANGE. THE PRESENTATION IS NEITHER A PROSPECTUS NOR AN OFFER OR INVITATION TO APPLY FOR UNITS OF FUND. THE INFORMATION CONTAINED HEREIN IS NOT EXHAUSTIVE AND MUST BE READ IN CONJUNCTION WITH THE INFORMATION MEMORANDUM
AND OTHER DOCUMENTS.
WHILE REASONABLE CARE HAS BEEN TAKEN TO ENSURE THAT THE INFORMATION INCLUDED HEREIN IS CORRECTLY AND FAIRLY REPRESENTED, MILESTONE AND OTHER PARTIES INVOLVED IN THE PREPARATION HEREOF ASSUME NO LIABILITY FOR THE RELEVANCE, ACCURACY OR COMPLETENESS OF THE CONTENTS HEREIN.
CERTAIN INFORMATION CONTAINED IN THIS PRESENTATION CONSTITUTES FORWARD-LOOKING STATEMENTS, OPINIONS OR BELIEFS. DUE TO VARIOUS RISKS AND UNCERTAINTIES, ACTUAL EVENTS OR RESULTS MAY DIFFER MATERIALLY FROM SUCH FORWARD-LOOKING STATEMENTS, OPINIONS OR BELIEFS. CERTAIN INFORMATION CONTAINED
IN THIS PRESENTATION (INCLUDING MARKET DATA) HAS BEEN OBTAINED FORM THIRD PARTY SOURCES. WHILE SUCH INFORMATION IS BELIEVED TO BE RELIABLE FOR THE PURPOSES USED HEREIN, NO REPRESENTATIONS ARE MADE AS TO ACCURACY OR COMPLETENESS THEREOF AND MILESTONE DOES NOT TAKE ANY RESPONSIBILITY FOR
SUCH INFORMATION
IN MAKING AN INVESTMENT DECISION, POTENTIAL INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE FUND DOCUMENTS AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. BEFORE MAKING AN INVESTMENT, EACH POTENTIAL INVESTOR SHOULD MAKE ITS INDEPENDENT ASSESSMENT AND INQUIRIES
AND CONSULT ITS OWN ADVISORS AS TO LEGAL, BUSINESS, TAX AND RELATED MATTERS CONCERNING AN INVESTMENT IN FUND.
THE FUND AND ITS PORTFOLIO COMPANIES ARE SUBJECT TO SEVERAL RISK FACTORS THAT MAY AFFECT THE FUND PERFORMANCE.
FUND SUMMARY
FUND SUMMARY
FUND OVERVIEW
STRUCTURED/MEZZANINE FINANCING OPPORTUNITIESIN REAL ESTATE
INVESTMENT STRATEGY
INVESTMENT ADVISOR
1
FUND SUMMARY
UNIQUEINVESTMENT OPPORTUNITY
LOW COSTS ANDADVISOR SHARE LINKEDTO PERFORMANCE
2
PROVEN TRACK RECORD OFINVESTMENT ADVISOR
The Advisors’ proven investment strategy of applying the rigor of private equity evaluation approach to real estate opportunities ensures attractive returns on capital
&& &
&
FUND LIFE
MINIMUM COMMITMENT
DRAWDOWN
COMMITMENT PERIOD
HURDLE RATE
TARGET RETURN
CARRIED INTEREST
MANAGEMENT FEE
REDEMPTION AND DISTRIBUTIONS
KEY FUND TERMS
3
MILESTONE CAPITAL – OVERVIEW AND PAST PERFORMANCE
MILESTONE CAPITAL ADVISORS - OVERVIEW
WELL RESOURCED INVESTMENT PLATFORM
CORPORATE GOVERNANCE
& &
&
RAPID BUSINESS GROWTH
PERFORMANCE& & IL&
& &
230
525
425
505
400
MDS I2007
IL&FSMilestone I
2007
MDS II2008
IL&FSMilestone II
2009
MilestoneFund LLC
2009
Real Estate Funds Raised (Rs. Crores) Real Estate Funds Asset Class Mix (Area)
RESIDENTIAL 45%
COMMERCIAL 25%
RETAIL 1%
LOGISTIC PARKS 29%
4
EXPERIENCE IN REAL ESTATE
The team includes professionals with investment, development and management skills who are actively involved and add value at each stage of the investment lifecycle
MILESTONE CAPITAL ADVISORS - DEVELOPMENT FUNDS PERFORMANCE
Since its launch in 2007
DETAILS OF EXITS
Location Fund Development Type Exit Extent Investment Exit Date Investment Multiple Date (Times)
5
DETAILS OF EXITS
MILESTONE CAPITAL ADVISORS - YIELD FUNDS PERFORMANCE
Regular quarterly payouts to investors have been made in the range of 10% -12% from IL&FS Milestone Fund-I & II
Since its launch in 2007, IL&
6
Location Fund Development Type Exit Extent Investment Exit Date Investment Multiple
Date (Times)
&
&
STRUCTURED / MEZZANINE FUNDING – OVERVIEW AND RATIONALE
MARKET SCENARIO AND OPPORTUNITY
– Nature of Funding:
– Attractive Returns:
– Lower Risk:
– Pricing:
– Short Tenure: d
– Origination:
CURRENT MARKET SCENARIO
PROPOSED STRATEGY: MDS III – Investment Horizon of 3½ years [option of extension of two terms of one year each]
7
FEATURES KEY CONSIDERATIONS
ATTRACTIVENESS
CONCEPT OF STRUCTURED / MEZZANINE FINANCING
10
Typi
cal A
nnua
l Ret
urn
(%)
Risk (Volatility)
15
20
25
30
Debt
Mezzanine
Equity
Indicative Capital Structure
DEBT 45%
EQUITY 25%
MEZZANINE STRUCTURE 30%
8
REAL ESTATE FUNDING - COMPARISON
DEVELOPMENT FINANCE COMPLETED PROJECTS FINANCE STRUCTURED/MEZZANINE FINANCE
Investment Strategy
Stake
Evaluation Approach
Investment Term
Security
Return
Periodicity of Returns
Rights at Liquidation
9
The following are select completed investments in existing funds with a similar investment strategy to that of MDS III
COMPLETED SIMILAR INVESTMENTS
Godrej Prakriti
Dheeraj Insignia
Neptune Swarajya
The above investment are structured transactions with adequate security coveragefor investment
10
FUND – STRUCTURE, INVESTMENT PROCESS,INVESTMENT PHILOSOPHY AND TEAM
TAXATION
&
MDS III - FUND STRUCTURE AND TAXATION
ExitProceeds
Investment by way ofEquity & Equity Linked Instruments
ManagementFees
Investment Distribution
Investors
Milestone CapitalAdvisors Limited
Portfolio Company 1 Portfolio Company 2 Portfolio Company 3
Milestone Domestic Scheme - III(A SEBI Registered Venture Capital Fund)
Milestone TrusteeshipServices Private Limited
TrusteeInvestment Advisor
11
MDS III - INVESTMENT PROCESS
12
InvestorReturns
Transaction Sourcing Preliminary Screening Detailed Review Presentation to Investment Committee (IC)
DealClosure
TermSheet
DealMonitoring
ICApproval
Active Management
ExitProceeds
SigningDetailed Due Diligence Negotiation
network of extensive relationships
investment banks, brokers, property agents
opportunity
discussions
including catchment area SWOT analysis
judging construction & project execution capability
term sheet
conducted by the team/third party
conducted by external agencies
and security creationplans and providing valuable inputs to the developers if required at various stages
as well as timing including selection of bankers
capital redemption
the Investment Committee and obtaining their approval
MDS III - Segment Focus
RESIDENTIAL 75%
COMMERCIAL 15%
OTHERS 10%
DERISKING*
MDS III - INVESTMENT PHILOSOPHY
MDS III - Geographical Focus
WEST 60%
SOUTH 25%
OTHERS 15%
Investment Focus
13
Single Company Level Investment Limits
Single Developers/Group Level Investment Limits
MDS III - TEAM PROFILE
Ashish Joshi
Mahesh Payannavar
Bhavya Bagrecha
Nilesh Karkhanis
Rahul Deshpande
14
RISK, MITIGANTS AND INVESTOR PROTECTION
MDS III - KEY RISK CONSIDERATIONS AND MITIGANTS
Key Risk FactorsKey Risk Type Key Mitigants
Economic andRegulatory Risks
Execution Risk
Financial Risk
Exit Risk
General Risks
15
TYPICAL PROTECTION RIGHTS
16
SECURITIES ON INSTRUMENTS
Investment to be structured with Put / Call option to sell / buy the shares at the agreed valuation
Put/Call Option
Promoters shares in the SPV/Portfolio company would be pledged in an escrow account and pledge would be released only upon receiving the agreed return
Share Pledge/Escrow
Corporate or personal guarantee of the Promoters to be invoked in case of default in payment of agreed return
Guarantee
CONTROL AND MANAGEMENT
Right to appoint directors on the board of the SPV /Portfolio company Board Seat
The sale proceeds of the project would be deposited in the Escrow account which would be jointly managed by Investor and Promoter / Developer
Escrow mechanism
APPENDIX
INDICATIVE DEAL PIPELINE
Project 1
Project 2
Project 3
Project 4
Project 5
Project 6
Project 7
Location DevelopmentType
Indicative Amount(Rs. crores)Project
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APPENDIX A
INDIA MACROECONOMICS - STEADY GROWTH IN POPULATION AND URBANIZATION
0
20
40
60
80
100
120
140
160
180
1995-96 1998-99 2001-02 2005-06 2009-10
Urban Households Rural Households
Total number of Households (million)
Source: NCAER
0%
1%
1%
2%
2%
3%
850
900
950
1000
1050
1100
1150
1200
98-9
9
99-0
0
00-0
1
01-0
2
02-0
3
03-0
4
04-0
5
05-0
6
06-0
7
07-0
8
08-0
9
Population (million) and Annual Growth Rates (%)
18
Urban CAGR 3%Rural CAGR 2%
APPENDIX B
INDIA MACROECONOMICS - GDP GROWTH LED BY SERVICES & INDUSTRIAL PERFORMANCE
0%
2%
4%
6%
8%
10%
12%
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
2005 2006 2007 2008 2009 2010
Growth Rate (%)
0%
2%
4%
6%
8%
10%
12%
14%
2005 2006 2007 2008 2009 2010
Agriculture Manufacturing Services
19
APPENDIX B
INDIA MACROECONOMICS - OTHER FACTORS ALSO INDICATE A FAVOURABLE TREND
Construction Housing & Real Estate Other Sectors
-
5
10
15
20
25
30
35
40
45
2005-06 2006-07 2007-08 2008-09 2009-10
Foreign Investment (US$ bn)
0
5000
10000
15000
20000
25000
Mar
-07
May
-07
Jul-
07
Sep-
07
Nov-
07
Jan-
08
Mar
-08
May
-08
Jul-
08
Sep-
08
Nov-
08
Jan-
09
Mar
-09
May
-09
Jul-
09
Sep-
09
Nov-
09
Jan-
10
Mar
-10
May
-10
Dow Jones
Performance of the Indian Stock Indices and Dow Jones
20
APPENDIX B
INDIA REAL ESTATE - IN RECOVERY MODE….
14,000
12,000
10,000
8,000
6,000
4,000
2,000
Dec-07
Feb-0
8
Mar-08
Apr-08
May-08
Aug-08
Sep-08
Oct-08
Nov-08
Dec-08
Feb-0
9
Mar-09
Apr-09
May-09
Aug-09
Sep-09
Oct-09
Nov-09
Dec-09
Feb-1
0
Mar-10
Apr-10
May-10
Aug-10
-
&
21
APPENDIX B
…LED BY IMPROVEMENT IN RESIDENTIAL LAUNCHES AND SALES
0%
20%
40%
60%
80%
100%
120%
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10
NCR-Delhi Mumbai Chennai Pune Hyderabad Kolkata
0%
5%
10%
15%
20%
25%
30%
0
10000
20000
30000
40000
50000
60000
70000
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
New Launches Net Absorption Absorption Rate
40%
30%
20%
10%
0%1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10
Mumbai NCR-Delhi Chennai
Abso
rpti
on R
ate
(%)
40%
30%
20%
10%
0%1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10
Hyderabad Kolkata Pune
Ab
sorp
tio
n R
ate
(%
)
22
APPENDIX B
SUPPORT PARTNERS
&
&
&
Kn
LEGAL ADVISORS
TAX AND STRUCTURING ADVISORS
AUDITOR
VALUATION AND MARKET INTELLIGENCE
REGISTRAR AND TRANSFER AGENT
23
APPENDIX C
CONTACT INFORMATION - For Fund related queries
CONTACT INFORMATION - For Operational queries
Mahesh Payannavar - Sr. Principal, Real Estate InvestmentsEmail : [email protected]
Afaque Ahmed - VP, Real Estate InvestmentsEmail : [email protected]
Amit Kumar - Regional Head North, Fund Raising & Investor ServicesEmail : [email protected]
Ami Jhaveri - Manager, Investor RelationsEmail : [email protected]
Cell :
Namrata Sharma - AVP, Investor Relations & Fund Raising Email : [email protected]
Cell :
Prabhu A - Sr. Executive, Investor RelationsEmail : [email protected]
Cell :
Sachin Tulsyan - & DevelopmentEmail : [email protected]
Ujwal Parekh - Associate, Real Estate InvestmentsEmail : [email protected]
MILESTONE CAPITAL ADVISORS LIMITED