INDIA HOUSING FUND - IIFL...

INDIA HOUSING FUND

November 2017India’s Housing sector set for recovery backed by vision of the Prime Minister and landmark reforms

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OPPORTUNITY IN HOUSING SECTOR IN INDIA

• Urbanization and Housing Demand

• Government as a Catalyst

• Demand (PMAY1) and Supply Side (80 IBA2) Incentives

• Affordable housing: Win-win for All Stakeholders

• Distressed Opportunities

1 PMAY: Pradhan Mantri Awas yojana, plan announced by the government to boost housing demand2 80 IBA: Section included in Income tax Act (2016-17 finance bill), to provide tax benefits to affordable housing projects

URBANIZATION TO DRIVE STRONG DEMAND FOR HOUSING

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Source : Making ‘The Dream of Millions’ A Reality – Assessment of Affordable Housing in India (JLL, Oct 2016); World Bank; Census of India, 2011; CIA, 2015; World Urbanization Prospects (United Nations, 2014Revision) *Mega cities (population of greater than 10 mn) include Greater Mumbai Urban Agglomeration (UA), Delhi UA and Kolkata UA

33%54% 56% 65% 74% 82% 86% 94%

Urbanization Percentage Globally

• Urbanization is on the rise in India, but the country

has a long way to go to match global benchmarks

• Urban towns (population greater than 1 mn) have

seen an increase in their share from 23.0% to

29.7% over the last decade*

• Number of metropolitan cities (population greater

than 1 mn) has risen sharply, from 35 to 53, during

the last decade

Come a long way, but way to go

17.919.8

23.125.5

27.7

32.7

39.5

44.8

50.3

0

10

20

30

40

50

60

1960 1970 1980 1990 2000 2015 2030 2040 2050

Urbanization growth in India

HOUSING FOR ALL MISSION NEEDS INVESTMENT OF MORE THAN USD 2TRILLION IN 5 YEARS

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• 90% of housing need is in the Economically Weaker Segment (EWS), Low and Mid income groups (LIG and MIG)

• Total cumulative housing requirement in these three segments is around 4.14 Cr units till 2022 translating to

~ 1 Cr units per year

Cumulative investment of over INR 139 Lakh Cr is required till 2022 to meet this target.

This translates to annual investment in excess of INR 28 Lakh Cr

Source : Funding the vision – Housing for all by 2022 (KPMG, NAREDCO, 2014); Census of India, 2011; Report of the technical group on urban housing shortage (2012-17), Ministry of Housing and Urban Poverty Alleviation; Working Group on Rural Housing for XII Five Year Plan, Ministry of Rural Development

Segment Target Income Group

% of Housing

Need

Typical Area (sq ft)

Number of houses (Cr)

Cost of House (INR

lacs)

Total Investment

(INR Lakh Cr)

Social Housing EWS (1 RK) 40% Up to 300 1.84 5 31.28

LIG Housing LIG (1 BHK) 30% 550-750 1.38 15 – 20 23.46

MIG Housing MIG (2-3 BHK) 20% 800-1200 .92 40 – 45 38.64

High end and Luxury

High or rich class (above 2-3 BHK)

10% Above 1200 .46 Above 50 46.00

Total 4.60 139.38

HOST OF INITIATIVES BY GOVERNMENT TO BOOST HOUSING

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“Housing for all by 2022”- PM Narendra Modi

Interest Subsidy of between 3%-6.5% on Housing Loans (under PMAY – CLSS*)

IMPACT ON REAL ESTATE• Increased velocity• Reduced project cost• Easy access to pool of capital

Exemption from GST^ for Affordable Housing

100% deduction in profit for Developers (u/s 80 IBA)

Infrastructure status = Cheaper capital

Easing of entry and exit norms for Foreign Direct Investment

Continuous reforms highlight government focus on affordable housing

Digitization of Land Records

*CLSS – Credit Linled Subsidy scheme ^GST : Goods and Service Tax

DEMAND SIDE INCENTIVE

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Prime Minister Housing Scheme (PMAY*) - Credit Linked Subsidy Scheme (CLSS)

CLSS Scheme

Type

Eligibility Household

Income (INR lakhs)

Carpet Area-Max

(sqm)

Interest Subsidy

(%)

Subsidy calculated

on a max loan of

(INR lakhs)

Maximum

Subsidy (INR

lakhs)

EWS and LIG Upto 6 60 6.50 % 6 2.7

MIG 1 > 6 till 12 90 4.00 % 9 2.4

MIG 2 > 12 till 18 110 3.00 % 12 2.3

CLSS provides substantial relief for LIG / MIG apartments

* PMAY : Pradhan Mantri Awas Yojana^ Source : Economic Times

• This incentive has provided a great push to buyers in this segment, where the subsidy can range from 15-30%of the cost of the house

• Total subsidy given under this scheme is INR 824 Cr as of July 13, 2017^• The main challenge for large section of population employed with unorganized sector has been lack of formal

documents of identification, address and income. This is gradually being filled by introduction of Aadhar,linking of PAN with Aadhar and in-depth assessment of income cycle of the customer

SUPPLY SIDE INCENTIVE

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Section 80 IBA

Criteria Metro Cities* Non-Metro Cities

LocationWithin a municipal limit or 25 KMs from

Municipal limit

Within the Jurisdiction of any Municipality or

Cantonment board

Total Area of Project Not Less than 1000 Square Meter Not Less than 2000 Square Meter

Each Residential Unit (Carpet) Does not Exceed 30 Square Meters Does not Exceed 60 Square Meters

Project utilize % Permissible of

Floor Area RatioNot Less than 90% Not Less than 80%

Built-up Area of Shop or other

commercial establishment

Does not exceed 3% of aggregate built-up

area

Does not exceed 3% of aggregate built-up

area

* Metro cities here include Chennai, Delhi, Kolkata and Mumbai

Supply side incentives to encourage developers to increase launches in this segment

Tax exemptions provided on the supply side i.e developers to promote further launches in this segment(announced in Union Budget, Feb 2017)

Government has kept size of 60 sqm outside the four Metro cities and applied the area limit on Carpet areabasis instead of Built-up area. This shall help a number of projects to qualify under the provision

AFFORDABLE HOUSING: WIN-WIN FOR INVESTORS, DEVELOPERS & HOME BUYERS

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GOVERNMENT

LAND OWNER / DEVELOPERS• Transparency and compliance to build

credibility of developers• Attract substantial amount of capital• Demand side dynamics and

government support to provide a viablebusiness model

INVESTORS

• Demand and supply side push tofacilitate urbanization

• Fulfilling dream of own house formillions to create feeling of social justice

• Better risk adjusted returns• Long lasting social impact on large

population through investment inAffordable Housing sector

• Confidence in under construction projects• Dispute resolution mechanism available• CLSS to provide substantial relief to buyers

CONSUMERS

Organized Real Estate sector poised to attract

more investment in Housing

DISTRESSED OPPORTUNITIES CREATED BY DEMONETISATION, RERAAND GST

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Attractive funding opportunities being created by regulatory changes and demand-supply disequilibrium

Distressed Opportunities :• The real estate industry has witnessed a year with several macro changes which will bring about an

overall change in the way the industry functions. Demonetisation, GST and RERA have changed theindustry from an unregulated to a regulated sector bringing about a paradigm shift in the functioning ofbusiness

• Developers will not be able to market a project without getting approvals and 70% of the projectrevenue will have to be kept in escrow to be utilized towards land and construction. This will increasethe initial capital requirement

• GST and RERA have also increased governance requirements and need developers to be moreaccountable and follow robust processes

• There is a supply overhang in certain segments and certain micro markets because of which developersare under pressure with unsold inventory creating attractive investment opportunities

• The sector is expected to consolidate whereby smaller players are expected to join hands with biggerplayers to execute projects or completely sell out. This is expected to create attractive fundingopportunities

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IIFL CREDENTIALS• Fund Raising Credentials and Track Record

• Real Estate Track Record

• IIFL Group Synergies

IIFL’S FUND RAISING CREDENTIALS: TRUST, TRANSPARENCY & TRACK RECORD

• IIFL has raised and managed over INR 25,000 Cr in diverse investment strategies across asset

classes

• IIFL has raised more than INR 6,000 Cr in the last 5-6 years for Real Estate investments from

investors in addition to proprietary investments

• IIFL has fully exited and returned monies for the first two funds raised in 2012 and 2013 to the

tune of ~1,200 Cr at a Net Return of ~19.6% and 18.6% respectively

•A total of 74 investments over the last 7 years of which we have fully exited 47 investments.

•Across funds we have exited 10 investments of ~850 Cr over the last 6 months

• IIFL Real Estate team has combined experience of more than 100 years across various geographies

pan-India

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FULLY EXITED TWO FUNDS WITH GROSS MULTIPLE OF MORE THAN 1.5X

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Proven exit track record with industry leading returns

Fund NameLaunch

Year

Amount Raised

(INR Cr)

No of RE Investments

Fully Exited RE

Investments

Gross IRR (in INR terms)1

Net IRR (in INR terms) 2

IIFL Real Estate Fund (Domestic) - Series 1 2012 661 12 12 19.6% 15.9%

IIFL Income Opportunities Fund 2013 615 13 13 18.6% 16.9%

TOTAL (A) 1,276

Fund NameLaunch

YearAmount Raised

(INR Cr)No of RE

Investments

Fully Exited RE

Investments

Portfolio IRR3

IIFL Income Opportunities Fund Series - Special Situations

2014 757 11 7 21.9%

IIFL Real Estate Fund (Domestic) - Series 2 2015 1,026 12 4 20.1%

IIFL Real Estate Fund (Domestic) - Series 3 (Class B) 2016 352 3 - 16.6%

IIFL Real Estate Fund (Domestic) - Series 3 (Class C) and RE PMS

2015-16 524 8 3 19.3%

IIFL Real Estate Fund (Domestic) - Series 4 2016 182 11 3 18.1%

IIFL Yield Enhancer Fund 2016 760 24 8 22.0%

TOTAL (B) 3,601

GRAND TOTAL (A+B) 4,8791IRR at fund level, gross of expenses 2 Net IRR post all fees and expenses 3 Portfolio IRR projected for full fund tenure, subject to contracted returns being received from all investments.All IRR/returns quoted on a pre tax basis

Fully Exited Funds – Average Fund Duration of 2.5 to 3 Years

Existing Funds

IIFL GROUP SYNERGIES ACROSS VALUE CHAIN IN HOUSING FINANCE

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Project Finance Construction & Project Completion

Sale to Home Owners & Possession

Availing of Home Loan

IIFL Retail Distribution hasstrong network acrossIndia with 4mn customersacross 1200 locations. Wehave also assisted clients inbuying and selling ofproperties across severallocations

Total loan AUM of USD3.4 billion retail loanswith a fast growingmortgage finance book ofINR 11,000 Cr. More thanINR 450 Cr disbursedunder PMAY-CLSS*scheme in last 2 years

IIFL Finance and HFCprovide finance forconstruction and workingcapital requirements ofresidential andcommercial projectsacross variousgeographies

IIFL Group has invested inover a 100 transactionsover the last several years.We have developed skillsfor legal, technical andcredit due diligence whilecompleting theinvestments

IIFL AMC and IIFL Finance

IIFL Finance and Housing Finance (HFC)

Retail Distribution HFC

* Pradhan Mantri Awas Yojana – Credit Linked Subsidy Scheme

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PROPOSED FUND STRATEGY• Project Selection Criteria

• Decision Making Process

• Representative Investment Pipeline

• Key Terms

• Taxation

PROJECT SELECTION CRITERIA

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Mumbai

Pune Hyderabad

Chennai

Bengaluru

Ahmedabad

Jaipur

NCR

Kolkata

Indore

Raipur

Lucknow

Focus on 10-12 top Tier I & Tier II cities

•Markets with high growth rates with basic amenities, physical and social infrastructure

•Reputed development partners with successful execution track record

•Prior experience in Affordable Housing segment

•Project Sizes in the range of 5-15 lakh sq ft

•Average Unit sizes in the range of 300-1200 sq ft

PMAY –

CLSS80 IBA

Mid-Income

Housing

Distressed

Investments

Fund

AllocationUpto 30% Upto 50% Upto 50% Upto 30%

SECURED INVESTMENT STRUCTURES WITH BUILT IN UPSIDE

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REPRESENTATIVE INVESTMENT STRUCTURE

Individual dealtenure of 4-5 years

No land aggregation risk*

No significant approval risk^

Debentures to create securityand establish a base return withan upside

Ring fencing the project withmortgage of land / developmentrights and escrow mechanism forproject cash flows

Corporate / Personal guarantee of promoters

Representation on SPV Board forproject monitoring and stepping inrights

* The Fund would invest in transactions where clear title land is already identified and part payment may be made directly toland owners/authorities for land/development rights^ The Fund would not invest in projects where time consuming/exceptional approvals are pending to be received

Investment level return of 18-20% divided between annual cash flow return of 8-9% and upside sharing

of around 12%

DECISION MAKING PROCESS

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Fund Management Team forwards recommendations to the Investment Committee

Investment Made

Investment team accordingly modifies the investment

proposal

Formal note created

No

Research includes: a. Investment meritsb. Market dynamics

Fund Management team reviews the investment opportunity

Investment idea is dropped

Positive

Additional covenants or enhancement suggested

Investment Committee votes on the Investment Proposal


Yes

Negative

Fund Management Team carries out detailed due diligence (DD) of the Investment

DD Includes:a. Legal / Title Searchb. Technical / Valuation

Positive review?

Investment Approved?

Investment opportunity identified by Investment Team

DD Positive?

No

Investment Documents executed. Pre-Investment Audit done


Yes

Additional covenants or enhancement suggested

Investment team accordingly modifies the investment

proposal

REPRESENTATIVE INVESTMENT PIPELINE – 1

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•Mid Income residential project in anestablished micro-market

•Location: Projects located in the city ofBangalore in a prime IT location

•Project Size: First phase of project size isaround 25 lakh sq ft to be developed inphases with total number of apartments inthe range of 2,000 - 2,500

•Unit / Ticket size : Average unit sizes in therange of 700 to 1200 sq ft with average ticketsizes in the range of INR 50 to 75 lakhs

•Completion Timeline: Between 5-7 years

•Status at entry: Partial land acquired, masterplanning done


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•Mumbai based developer with local market expertise

•Mid-income housing project available at distress valuation

•Location: Project located in Dahisar, a western suburb of Mumbai

•Project Size: Approx. 5.5 lakh sq ft with around 900 units

•Unit / Ticket size : Average unit size of around 700 sq ft with average ticket size of around INR 70-80 lakhs


•Status at entry: Rehab Construction underway


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•Leading Mumbai based developer

•Residential housing project with compactapartments qualifying for 80 IBA

•Location: Project located in the WesternSuburb of Kandivali

•Project Size: Approx 5.5 lakh sq ft witharound 1,000 units

•Unit / Ticket size : Average unit size of 320sq ft with average ticket size of around INR50-75 lakh


•Status at entry: Initial approvals received.Site vacation in progress

KEY TERMS

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Target Fund Size INR 2,500 Cr

Sponsor Commitment Up to INR 185 Cr (including Anchor Investor)

Fund Term5 years from the date of final closing* and with possible extension of 1+1 year, subject toapproval of two-thirds of the unit holders by value of their investment in the Fund

Drawdown Tenure Up to 24 months from the close of first drawdown

Initial Contribution 15% - 25% of the Commitment Amount

Target Return (Gross IRR) 18-20% per annum in INR terms

Hurdle Rate 14% per annum in INR terms (pre-tax, post-expense)

NAV Frequency Monthly (After Final Closing)

* Final closing shall not occur later than 18 months from the date of Initial Closing

Share Class Class A Class B Class C Class D Class E Class F Class G

Minimum Commitment (INR Cr) 1 2 5 10 20 50 100

Set-up Fee (Fund Incorporation)Upto

2.00%

Upto

2.00%

Upto

2.00%

Upto

2.00%

Upto

2.00%Nil Nil

Management Expense ( charged on net

capital contribution)2.00% p.a.

1.75%

p.a. 1.50% p.a. 1.25% p.a. 1.00% p.a. 0.75% p.a. 0.5% p.a.

Performance Fee (over and above the

Hurdle Rate with Catch-up)20% 17.5% 15% 12.5% 10% 7.5% 5%

^Share Class S is for subscription by Sponsor, Investment Manager, IIFL Group Companies, Associates, Shareholders of Group Companies andEmployees of IIFL GroupCo-investment opportunity is available at the discretion of the Investment Manager , as per terms of the PPM.

TAXATION

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•The Fund is registered with Securities and Exchange Board of India (‘SEBI’) as a Category II Alternative

Investment Fund, in accordance with the SEBI (Alternative Investments Funds) Regulations, 2012 (the ‘AIF

Regulations’)

•As per the Finance Act, 2015, a so called ‘tax pass-through’ status has been extended to Category II AIFs.

Accordingly, the income of the Fund, other than that taxable under the head ‘profits and gains from business or

profession’, should be taxable directly in the hands of Investors in the same manner as if it were the income

accruing or arising to, or received by the Investor, had the investments by Fund been made directly by them.

•The Fund will be required to deduct tax at source in respect of income (other than “business income”) that is paid

to or credited to the account of the investors at a rate of 10% (plus applicable surcharge and education cess).

The Fund would issue a consolidated statement to investors towards the same. Prospective Investors are urged to

consult their own tax advisers in this regard and only rely on their advice.

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INVESTMENT TEAM

• Experienced Real Estate Team

• Proposed Investment Committee

EXPERIENCED REAL ESTATE TEAM

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Balaji RaghavanCIO, Real Estate Investments and Fund Manager, India Housing FundBalaji brings on board more than 20 years of experience in the Real Estate Finance and Banking industries.Since joining IIFL in 2010, he has led the real estate business, building an investment book of more than USD 1bn with over 60 transactions. Balaji heads the domestic real estate funds and manages ~40 top developerrelationship across the country.

Prior to joining IIFL, he headed the mortgage finance business for ICICI Bank and he was a key contributor inICICI’s mortgage business growth and he successfully managed a ~USD 12 bn portfolio across variousparameters of distribution, risk and relationships in the industry. He was one of first few members of ICICI'sconsumer banking team when the bank started its retail business. Previously he had worked with ABN AmroBank N V as a Regional Business Head.

Abdeali TambawalaPartner, Real Estate InvestmentsAbdeali has been part of IIFL since 2009 and has experience of 12 years across mortgages, constructionfinance, debt and equity syndication. His area of specialization includes sourcing real estate opportunities onthe syndication and structuring side.

He holds a Post Graduate Diploma In Management and his previous assignment was with Kotak MahindraBank where he advised clients and corporates on acquisitions and structured lending. As a part of the fundmanagement team he has overseen multiple investments across Mumbai, NCR, Bengaluru and Pune withinvestments and exits exceeding ~USD 500 million

FUND TEAM WITH COMBINED EXPERIENCE OF OVER 100 YEARS

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Investment & Fund Management

Saurabh GuptaSaurabh brings on board more than 15 years of experience in real estate, banking and consulting. He has previouslyworked with Citigroup, ICICI Bank, Royal Dutch Shell and PricewaterhouseCoopers in India and the UK. He joined IIFLgroup in 2010 and has since been involved in over 30 Real Estate transactions with investments exceeding USD 200million, and exits of ~USD 100 million across Mumbai, Chennai, Bengaluru and Jaipur. He holds an MBA from LondonBusiness School, UK.

Vivek MishraVivek has over 10 years experience in various strategic divisions of leading companies. He started his career in theIndian operations of Unilever. He was then a part of ICICI Bank where he was the Zonal business head for Real Estatedivision, managing sales, risk, and underwriting. At IIFL, he is an active part of the investment team and he hasoverseen multiple investments across the country exceeding USD 500 million. He also plays a part in commercial sale,debt syndication and asset management. He holds an MBA from the Indian School of Business.

Anurag SolankiAnurag brings on board over 17 years of exposure in Real Estate, Telecom & Banking services with names like GECapital, Vodafone, ABN Amro Bank and Standard Chartered Bank in Direct, Corporate and Government Sales. Anuragheads Developer Funding for Northern India at IIFL and overseen investments across NCR, Jaipur, Chandigarh andLucknow where he has overseen investments exceeding USD 300 million.

Amit JainAmit is a Chartered Accountant with 14 years experience in Risk and Asset Management. His previous assignmentswere with ICICI Bank ,Reliance Capital Finance & Aditya Birla Finance his responsibilities included corporate andretail finance, taxation, company law, underwriting and syndication. He runs the risk management process - analysing,assessing & monitoring creditworthiness of real estate investment proposals based on various risk parameters andproject feasibility.

EXPERIENCED INVESTMENT COMMITTEE TO PROTECT INVESTOR INTEREST

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R. VenkataramanCo-Promoter and Managing Director, IIFL Holdings Ltd.Mr. R. Venkataraman joined IIFL Holdings Board in 1999. He has contributed immensely in the establishment of various businesses andspearheading key initiatives of the group over the past 18 years. He previously held senior managerial positions in ICICI Limited,including ICICI Securities Limited, their investment banking joint venture with JP Morgan and Barclays – BZW. He worked as an AVPwith GE Capital Services India Limited in their private equity division. He has varied experience of more than 26 years in the financialservices sector. He is a B.Tech from IIT, Kharagpur and an MBA from IIM, Bangalore.

Amit ShahCo-Founder, IIFL Investment Managers & CEO, IIFL Asset Management BusinessAmit drives the firm’s international footprint across offices in New York, Houston, London, Geneva, Mauritius, Dubai, Singapore andHong Kong and active relationships across the global investor community. Having built Institutional & NRI HNI relationships globallyfor the group, the firm’s assets under management today stands at over US$ 5 billion. Amit has more than 18 years of experience in thefinancial services industry, which include 11 years of advising global institutional investors. A passionate leader, he is responsible forbuilding an ownership-driven team consisting of the best global talent. Earlier, Amit was associated with Kotak Mahindra Inc, NewYork, Citi Group’s Wealth Management business and IDBI bank in various leadership roles. Amit was recognized with the ‘NRI of theYear’ Award 2016, for Asia Pacific Region. Amit is a Chartered Financial Analyst (CFA) from ICFAI and holds a Bachelor’s degree inCommerce.

Prashasta SethCIO, IIFL Asset Management Ltd.Prashasta is responsible for all the equity funds managed by IIFL Asset Management. He joined the firm in 2008 and has beeninstrumental in setting up and growing the equity desk. Prashasta has over 16 years of experience in the financial services industry. Hehas been managing and advising pooled assets and investor portfolios. He specialises in developing investment strategies, generatingstock ideas and creating actionable research reports. In his earlier roles, he worked for J.P. Morgan, London and headed Irevna - aStandard & Poor’s company. He holds a Postgraduate Diploma in Business Management from the Indian Institute of Management (IIM)Ahmedabad and a Bachelor’s of Technology degree from the Indian Institute of Technology (IIT) Kanpur.

Investment Committee

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ABOUT IIFL• IIFL Group

• Key lines of Business

IIFL GROUP

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Fastest GrowingWealth Management

Company in India

Over 1,33,000 CrsAssets Under Advice,

Distribution and Custody

The Capital CodeProposition, Platform, People and Processes

Employee Owned19.4% of the company is owned by employees

MottoOwnership Mindset and Alignment of Interests

22 Officesacross 8 countries

and 15 Indian cities

IIFL Investment Managers• IIFL Holdings (IIFL:IN): offering a full service platform for Institutional, Private Wealth and Retail clients

•Group includes Equity Broking, Institutional Equities, Private Wealth, Investment Banking, Credit and Insurance

•Key investors in the Group:

- Fairfax: Prem Watsa's Fairfax Group holds 35.5%

- General Atlantic: invested $173mn in IIFL Wealth for 21.6% equity (EV $780mn)

- CDC: sovereign fund owned by UK government acquired 15% in IIFL Finance (EV $ 950mn)

One of India’s fastest growing financial services groups

* As on Sept 30, 2017

IIFL INVESTMENT MANAGERS

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• Distribution, Advisory and Asset Management are established businesses, account for 95% of total assets

• Lending is a newer business; significant growth visibility in the immediate future

Asset Management

• AUM INR 23,000 crs• Mutual Funds and AIFs

Advisory and Succession Planning

• AUM ~ INR 35,000 crs• Advisory Services • Wealth Structuring• Succession Planning• Corporate and Family

Structuring

Distribution

• AUM ~ INR 80,000 crslargest private wealth management AUM)

• Broking, Distribution• Customized

Discretionary strategies

Lending

• Loan Book ~INR 5,000 crs• Loan Against Securities• Margin Funding• Loan Against Property• IPO Financing

Promoters

Others

29%

35.5%

35.5% 57.2%

IIFL Holdings

19.85%

Employees

22.95%

Institutional investors of repute (Fairfax, GA) lend significant expertise

Shareholding pattern of IIFL Holdings and IIFL Investment Managers is as at Sept 30, 2017

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RISKS & DISCLAIMER• Key Risks

• Disclaimer

KEY RISKS • Real Estate Sector Risks:

Various aspects such as construction risks, safety risks, zoning risks, permit risks, changes in tax laws and accounting standards,lending regulations, government policies related to Real Estate Sector, environment laws, health and safety laws, government landacquisition, acts of terrorism and acts of nature may negatively impact returns of the fund. Real Estate sector with long gestationperiods has experienced considerable fluctuations and cycles in the past. While the target segment of affordable housing is quiteresilient, a broad based deceleration in economic growth will lead to difficulties in sale of units in investee projects. Unemployment,inflation and reduction in credit availability or rise of interest rates in particular will significantly reduce demand for units in citieslike NCR, Mumbai and Bangalore.

• Investment Primarily in Illiquid Securities:Despite underlying investments being listed or to be listed fixed income instruments, the liquidity in these instruments may be thin.These investments may be difficult to value, sell or otherwise liquidate and the risk of investing in such securities is greater than therisk of investing in more frequently traded securities.

• Credit Risk:If any of the investee companies defaults in meeting its obligations towards the Fund, investment returns from the fund will benegatively impacted.

• Legal and Regulatory Risks:The Fund may have difficulty enforcing contractual obligations or judgments against Indian companies. Regulatory investmentrestrictions applicable to the Fund may impede its ability to invest in certain instruments limiting its ability to generate adequatereturns or cash flows.

• Local Laws, Political and Economic Risks:Real Estate activities in India are subject to local municipal and state regulations and taxes in addition to central regulations and taxes.Any adverse changes in same or local economic conditions or political stability may have adverse impact due to nature of affordablehousing developments.

• Currency:Investment in Unhedged Share Class are subject to USDINR exchange rate fluctuations. Developments in Global financial markets inaddition to developments in Indian financial markets, economic and fiscal conditions may impact currency movement.

• Liquidity:The Fund is close-ended and organized primarily for long-term investors, and is not intended to be a trading vehicle.

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DISCLAIMER

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The purpose of this presentation is to provide general information to prospective investors in a manner to assist them in making investmentdecision. It does not purport to contain all the information that the prospective investor may require. The presentation is made for informationalpurposes only and should not be regarded as an official opinion of any kind or a recommendation. It does not constitute an offer, solicitation or aninvitation to the public in general to invest in the AIF. This presentation is intended for the use of prospective investors only to whom it is addressedand who is willing and eligible to invest in AIF. The information contained in this presentation is obtained from sources believed to be reliable. We donot represent that any information, including any third party information, is accurate or complete and it should not be relied upon without properinvestigation on the part of the investor/s. IIFL Wealth Management Limited (IIFLW) or any of its director/s or employees does not assure/giveguarantee for any accuracy of any of the facts/interpretations in this document, and shall not be liable to any person including the beneficiary forany claim or demand for damages or otherwise in relation to this opinion or its contents. This presentation is qualified in its entirety by theInformation Memorandum/PPM and other related documents, copies of which will be provided to prospective investors. All investors must read thedetailed Private Placement Memorandum (PPM) including the Risk Factors and consult their tax advisors, before making any investmentdecision/contribution to AIF. Capitalized terms used herein shall have the meaning assigned to such terms in the PPM and other documents.

NOTE:

IIFL Wealth Management Limited (IIFLW) is Co-sponsor of the Scheme. IIFL Wealth Management Limited (IIFW) is holding company of InvestmentManager/Trustee Company of the Scheme and Co-Sponsor to the Scheme which may receive distribution or any other fees in this connection.Further, IIFLW and its group, associate and subsidiary companies are engaged in providing various financial services and for the said services(including the service for acquiring and sourcing the units of the fund) may earn fees or remuneration in form of arranger fees, referral fees, advisoryfees, management fees, trustee fees, Commission, brokerage, transaction charges, underwriting charges, issue management fees and other fees.

The contributors should note that the Scheme is neither approved or recommended by SEBI nor does SEBI certify the accuracy oradequacy of the PPM of the Scheme.

THANK YOU.

INDIA HOUSING FUND - IIFL...

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