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Feroze Azeez exposes the truth about India’s real estate funds

Hat Tip: Siddharth

5 replies on “Feroze Azeez exposes the truth about India’s real estate funds”

Just a simple question…….on what basis can they, or they be allowed, to expect 24% IRR ? Which industry or financial instrument have they had experience with to expect 24% IRR ? Of course, the last page disclaimer (of a 20 page glossy sugary sweet brochure) saves their asses !

Mr. Azeez is right……it is the commissions offered (and may I add, the kickbacks) that make ‘Investment Advisors’ push these products, despite a lack of track record.

Wonder what the story of Birla Gold Bonds is ? They gave the investors a ridiculously low IRR, but had an award winning gold sequinned brochure when they projected the fund !

From FT.com:
In a chapter called “The Semi Attached Figure”, Huff writes of a judge in India advising a young British civil servant. “When you are a bit older, you will not quote Indian statistics with that assurance. The government are very keen on amassing statistics — they collect them, add them, raise them to the nth power, take the cube root and prepare wonderful diagrams. But what you must never forget is that every one of those figures comes in the first instance from the chowty dar [village watchman], who just puts down what he damn pleases.” This is the lesson imparted to every first year banking analyst or management consultant building their first cash flow model or strategic plan: garbage in, garbage out.

In my previous comment, I meant the Milestone Bullion Series I, which gave me a return of Rs. 1,069/- ,on an investment of Rs.20 lakhs over five years. Can’t even calculate IRR !!!
My apologies….it was not Birla Gold Bond.

PE fund house business model is universal nothing surprising about it. In India, they invest in corrupt business, unregulated sector with political interference and with worst promoters integrity. This is main reason why investment structure has shift from equity to structured product with regular interest payout and guarantee redemption with collateral. Yet yet if you see some of the fund house gave 5% return during the fund life. Mind you its like Salman Khan winning national award!!

And this analyst Azeez expect fund house to give high risk-free return from unethical promoters and unregulated sector which do not have so-called-sebi-type-agency to protect investor in RE. This is not mutual fund or stock market. It is illiquid and high-risk investment with lock-in period.

Investor returns in RE depend on when you invest at the right price. Those invested before or during Lehman crisis are sitting with multiples returns.

P.S: Anand Rathi is losing HNI clients to RE fund house & taking a dig at them.

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