The Special Window for Affordable & Mid-Income Housing (SWAMIH) fund recently marked a milestone by completing its first total exit from an investment targeting the completion of a residential project in Mumbai. This achievement follows the successful completion of over 1,500 homes across seven projects, keeping the fund on track to deliver at least 10,000 homes annually.
Details About SWAMIH Fund
Initiated in 2019, the SWAMIH fund is a government-sponsored enterprise set up as a Category-II AIF (Alternate Investment Fund) debt fund registered with SEBI (Securities and Exchange Board of India). The premise behind its creation was the cash trap situation negatively impacting the real estate sector in 2019, causing a squeeze on liquidity. In such situations, interest rates drop significantly, making savings more appealing than investments for investors.
SBI (State Bank of India) CAP Ventures, a subsidiary of SBI Capital Markets and the SBI, operates as the Investment Manager of the Fund. The Department of Economic Affairs’ Secretary, Ministry of Finance, stands as the Fund’s Sponsor on behalf of the Indian Government.
Eligibility for SWAMIH Funding
To qualify for last-mile funding from SWAMIH, real estate projects must be registered under the Real Estate (Regulation and Development) Act (RERA) and stalled due to insufficient funds. These projects must be near completion and fall within the ‘Affordable and Middle Income Project’ category, i.e., housing units should not surpass 200 sq.m. Projects with net-positive worth are also eligible, where the value of their receivables and unsold inventory exceeds their completion costs and unresolved liabilities.
Objective of SWAMIH Fund
The fund seeks to facilitate the completion of stalled housing projects, thereby ensuring that homebuyers receive their apartments. Additionally, this fund helps unlock liquidity in the real estate sector, benefitting core industries such as cement and steel.
About Alternative Investment Fund (AIF)
An Alternative Investment Fund refers to any privately pooled investment vehicle established in India. It collects funds from sophisticated investors, both Indian and foreign, and invests according to a defined investment policy that benefits its investors. AIFs are not included in SEBI (Mutual Funds) Regulations, 1996, SEBI (Collective Investment Schemes) Regulations, 1999, or any other regulations of the Board regulating fund management activities.
Categories of AIF
AIFs are divided into three main categories: Category-I, Category-II, and Category-III. Category-I funds are invested in businesses with high growth potential, such as startups and small and medium enterprises. Category-II includes funds invested in equity and debt securities. Category-III funds aim to generate returns over a short period by using complex and diverse trading strategies.
About RERA
The Real Estate (Regulation and Development) Act (RERA) is law passed by the Parliament in 2016 and implemented from 1st May 2017. RERA establishes a Real Estate Regulatory Authority in each state to regulate the real estate sector and function as an adjudicating body for swift dispute resolution. RERA aims to safeguard home-buyers and stimulate investments in the real estate sector by promoting efficiency and transparency in real estate transactions.