BHIVE Group said it has received commitments for the fund from some global family offices and marquee business houses in India
The startup expects to see the fund’s first close by September 30
The fund plans to acquire fully completed commercial real estate properties at prime locations with clear titles and occupancy certificates in a range of INR 20 Cr-INR 100 Cr
Commercial real estate operator and co-working space provider BHIVE Group on Thursday (September 8) said it has received commitments of INR 240 Cr for its INR 400 Cr alternate investment fund (AIF) scheme — BHIVE Commercial Real Estate Opportunities Fund Series 1.
In May this year, BHIVE Group announced its plans to raise an INR 400 Cr AIF registered with the Securities and Exchange Board of India (SEBI).
The startup said that it has received commitments for the fund from some global family offices and marquee business houses in India and expects to see its first close by September 30.
BHIVE Group plans to deploy the capital to curate prime commercial real estate properties following a strong rebound in the office market after the waning of the Covid-19 pandemic impact.
The fund will acquire fully-completed commercial real estate properties at prime locations with clear titles and occupancy certificates in the range of INR 20 Cr-INR 100 Cr.
The category II close ended fund will offer an opportunity to high-net-worth individuals (HNIs) and family-owned businesses looking to participate in the commercial real estate growth story, said BHIVE Group in a statement. This capital will be deployed into commercial office real estate spaces, enabling BHIVE to create more infrastructure for startups and IT firms.
“As the country leaves behind the impact of COVID-19, economic activity has picked up significant pace with domestic and global companies looking to make fresh investments in India,” said Shesh Rao Paplikar, partner at BHIVE Fund. “This bodes well for the commercial real estate segment and is an opportune time to invest in the sector to reap rich dividends with high demand for quality office space.”
With a low entry ticket size of INR 1 Cr, BHIVE Group is trying to enable Indian investors to also acquire a share in prime office space, which, the company believes, would otherwise have been out of bounds for them.
According to the industry average, investments in commercial real estate yield a return in the range of 8%-11% as against 2%-3% returns in residential real estate. In contrast, BHIVE’s AIF II is helping customers generate double the yield of 20%-24% with relatively low investment risks, the startup claimed.
Besides, as it deploys the capital in fully completed properties with all approvals, it reduces the risk to principal invested, it said.
Founded in November 2014, BHIVE Group runs BHIVE Workspace and Bhive Alts. BHIVE Workspace is among the largest co-working space providers in Bengaluru. It claims to provide spaces to 172 startups and companies operating from over 17 locations in the city. Currently, with its operations only in Bengaluru, BHIVE Group is planning to expand to six other major Indian cities by June 2024.
BHIVE Alts, on the other hand, is a fintech platform that let retail investors invest in institutional quality real estate, thereby helping them diversify their portfolio
After the pandemic-induced lull in the office real estate market, the segment has started growing once again, and with the number of startups also growing, the demand for flexible workplaces or coworking spaces is on a rise.
As per a late 2021 CII-ANAROCK report, the market size of co-working spaces is expected to grow at a compound annual growth rate (CAGR) of 15% over the next five years.
The coworking space has seen quite a few fund raises in the recent past. In June, Inc42 reported about IndiQube raising around $30 Mn in fresh funds led by WestBridge Capital.
Besides, ABL Workspaces raised INR 15 Cr ($1.9 Mn) in Series A funding from Canada-based Ethik Inc in November last year.