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Investors in Aditya Birla’s real estate fund get exit after 9 years, at a loss

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Investors in Aditya Birla Real Estate Fund-I will finally get an exit, three years behind schedule, and after taking a minor loss.

The fund, which was started in 2010 with an investment amount of Rs 1,050 crore, was launched as a six-year closed-end fund. It invested in 13 properties.

But with the real estate market going into a tailspin, it was unable to exit all its investments. After two extensions of a year each, one of the shareholders of Aditya Birla Sun Life Asset Management Company (ABSL AMC) will buy the fund’s units to pay off investors, according to a report by Financial Express.

The report did not say which shareholder, Aditya Birla Capital or Canada’s Sun Life Financial, will bail out the investors.

The fund had previously returned Rs 601 crore to its investors, and was scouting for buyers for the rest of properties it had invested in. But having failed to secure a fair price – according to the FE report, the best offers the fund got were about 25 percent lower than what was considered fair price – the asset manager’s shareholders finally stepped in.

According to the letter written to the fund’s unit-holders, the AMC said its partner would pay about Rs 368 crore, or 8 percent higher than the fair price the fund had arrived at. FE said it had seen a copy of the letter.

The report further said that the fund would also keep aside Rs 30 crore to meet a potential tax demand that it had legally challenged.

As a result, investors would get a total payout of Rs 939 crore, not counting the tax money put aside, or Rs 89.4 for every Rs 100 invested.