About Nisus Finance Services Co Limited

Nisus Finance Services Co Limited is mainly engaged in the business of Transaction Advisory services, while their subsidiaries, stepdown subsidiaries, namely Nisus BCD Advisors LLP, Nisus Finance & Investment Managers LLP, Nisus Finance International Advisors IFSC LLP, Nisus Finance Investment Consultancy FZCO and associate company namely Dalmia Nisus Finance Investment Managers LLP which are engaged in Real Estate and Urban Infrastructure Fund and Asset Management. The other subsidiary i.e. Nisus Fincorp Private Limited, an NBFC company is having main object of financing. They have recently invested in an entity named Microsafe Projects LLP as an Associate of the company which is engaged in the business of acquiring residential properties constructed and/or under construction.

As of June 30, 2024, the Company have 34 employees in their Nisus Group (NiFCO). The Banker of Nisus Finance Services Co is HDFC Bank Limited.

AIF INDUSTRY
Alternative Investment Fund or AIF means any fund established or incorporated in India which is a privately pooled investment vehicle which collects funds from sophisticated investors, whether Indian or foreign, for investing it in accordance with a defined investment policy for the benefit of its investors. AIF does not include funds covered under the SEBI (Mutual Funds) Regulations, 1996, SEBI (Collective Investment Schemes) Regulations, 1999 or any other regulations of the Board to regulate fund management activities. Further, certain exemptions from registration are provided under the AIF Regulations to family trusts set up for the benefit of 'relatives’ as defined under Companies Act, 1956, employee welfare trusts or gratuity trusts set up for the benefit of employees, 'holding companies’ within the meaning of Section 4 of the Companies Act, 1956 etc.

REAL ESTATE REMAINS THE LEADING SECTOR TO RECEIVE FUNDING IN AIF
The financing gap that had long plagued the Indian real estate industry had limited its ability to grow. Nonetheless, Real Estate Alternative Investment Funds (AIFs) have become a game-changer and revolutionized the market in recent years. SEBI-regulated investment vehicles known as real estate-focused AIFs combine investors capital and allocate it mostly to Indian real estate assets, providing a great opportunity for investors and developers. It can be noted that in the past 3 years, real estate has been the most preferred sector across AIFs to invest in. Between FY21 and FY23, deployment of funds was maximum in real estate sector.

The Indian real estate industry, was facing a significant funding shortfall that had hindered project launch and execution and sector growth. Real estate AIFs have become a dependable source of funding, giving developers access to much needed capital.

Due to introduction of the real estate AIFs, the developers can fund their projects without depending just on conventional financing sources like bank loans or private equity. This funding source enables developers to create premium real estate assets, purchase land parcels and fasten project execution. Real estate AIFs are a desirable option for project financing since they provide developers with a number of advantages. First of all, these funds provide developers adaptable financing choices that may be customized to fit their unique needs. Developers can access funds at different stages of project development, from purchase to last-mile completion, thanks to Real Estate AIFs' customized structure. The engagement of proficient fund managers facilitates developers in project management optimization, operational efficiency enhancement, and regulatory complexity navigation. Real Estate AIFs also make it easier for developers to work together, which promotes knowledge exchange and industry synergies.

The assets under management of the Indian real estate market based on the top 5 players is around Rs 20,916 crores as of FY24.Such funds provide a higher return as well as offer diversification across developers and projects.

From investors point of view, AIFs in real estate are a lucrative option to invest as they provide a diversification across regions, projects and developers. The investors get the option to invest in real estate projects which may generally be out of reach.

Also, these funds are managed by experienced and knowledgeable fund managers who have good knowledge about the sector like real estate market. Real estate investing has never been a simple endeavour. Investors have to cope with a variety of issues, including complicated asset management, paperwork and operational difficulties. HNIs wishing to invest in real estate investment themes are finding that real estate-focused AIFs are a great alternative. As in the typical AIF process, the fund managers conduct a strict due diligence for the portfolio companies, offer guidance and manage these investments very actively.

The AIFs also play a key role in promoting transparency and governance in the industry. A strict regulatory framework around AIFs ensures compliance and accountability, reduces the risk of manipulation and increases investor confidence. This increased transparency will attract both domestic and foreign investors in future, increasing investment participation and spurring industrial growth.

In general, the real estate projects are risky due to their nature and such funds provide a good opportunity to the investors that balances out their risk and return. Hence it is safe to assume that the real estate AIFs will continue to increase in future as well.

Benefits of setting up AIFs through the new route - Gift City
The Gujarat International Finance Tec-City (GIFT City) project consists of a dedicated Domestic Tariff Area (DTA) and a multi-service Special Economic Zone (SEZ). GIFT City is spread out over a vast region, taking approximately 261 acres for the SEZ and 625 acres for the DTA.

The Gujarat Government to work on this ambitious project, through the Gujarat Urban construction Company Limited (GUDCL), created the Gujarat International Finance Tec-City Company Limited (GIFTCL) to lead this project. GIFT City, which is ideally situated next to the Sabarmati River, benefits from Ahmedabad's status as a major economic hub.

GIFT City is India’s premier operational greenfield smart city and is India’s maiden International Financial Services Centre (IFSC). The IFSC within the GIFT City was planned to serve as a crucial hub to cater the growing needs of the customers that are beyond the domestic functions. It is regulated by the International Financial Services Authority (IFSCA). The IFSC can be defined as the jurisdiction that offers a strong market for financial products and services to residents as well as nonresidents that permit transactions in currencies other than the Indian Rupee. This crucial role is assumed by the International Financial Services Centers Authority as well as the function of supervising financial services and goods within the GIFT IFSC in India. Before the IFSC was established, the regulatory responsibilities were for IFSCA were spread across domestic regulators, such as the Insurance Regulatory and Development Authority of India (IRDAI), the Pension Fund Regulatory and Development Authority (PFRDA), the Securities and Exchange Board of India (SEBI), and the Reserve Bank of India (RBI). The necessity to improve the efficient cooperation between various regulatory agencies and to streamline regulatory operations led to the establishment of IFSCA.

The main goal of IFSCA is to develop a welcoming and business-friendly atmosphere to represent India’s commitment to nurturing financial ecosystem within GIFT IFSC. It seeks to create a leading regulatory environment that not only facilitates international trade.

REAL ESTATE INDUSTRY IN INDIA
Real estate is one of the most crucial and recognized sectors across the globe. It is segmented into four sub-sections: residential, commercial, retail, and hospitality. The real estate industry's growth depends on advancements in the corporate environment and the subsequent demand for office space and urban & semi-urban accommodations. The construction industry, is therefore, one of the major sectors in terms of its direct, indirect, and induced impacts on all the sectors of the economy.

In India, the real estate industry is the second-largest employment generator after agriculture. Around three houses are built per 1,000 people annually against the required construction rate of five houses per 1,000 individuals annually, as per industry estimates. This indicates that there is significant untapped potential for growth in the sector.

The residential real estate segment was performing exceptionally well during the first half of the previous decade on account of growth in the economy and the services sector which resulted in migration to metros and propelled the demand for housing units in these areas. However, problems related to elevated property prices, delayed launches by developers and stalled projects triggered some cold feet towards the sector. From the point of view of financing too, the IL&FS crisis created problems in the NBFC sector, which is a pivotal source of funding for real estate. To add to this, the coronavirus outbreak in early 2020 and the concomitant lockdowns across the country caused acute stress to the residential real estate segment during H1CY20.

After reopening of the economy post COVID-19 pandemic, there has been a notable increase in demand for residential properties, primarily driven by end-users in the affordable housing segment. Foreign investments continued to flow into the sector, aided by the easing of the pandemic situation, resumption of travel, favourable policies such as tax benefits, and advantageous currency exchange rates, which have further contributed to increased investments from Non-Resident Indians (NRIs), particularly in the residential sector.

NISUS FINANCE SERVICES CO LIMITED COMPETITIVE STRENGTHS
1. A well-established, credible and customer-focused NiFCO brand
2. Diversified Business Model
3. Ability to identify emerging market trends in a timely manner
4. Strong Management and distinctive people and culture
5. Prudent governance, risk management, and internal control frameworks

NISUS FINANCE SERVICES CO LIMITED GROWTH STRATEGIES
1. Further grow their Advisory Business
2. Expanding the reach and footprint of their businesses
3. Leverage their core strengths to generate growth through expansion in their investor base
4. Further Strengthening on their Product Development
5. Continue to attract, train and retain their people
6. Continue to leverage their customer base and Diversified Business Platform
7. Expansion through inorganic growth 

NISUS FINANCE SERVICES CO LIMITED RISK FACTORS & CONCERNS
1. Any adverse development in the real estate sector would negatively affect the results of operations.
2. They may not be able to adequately protect their intellectual property rights, including the use of “Nisus” name and associated logo.
3. The revenues are dependent on their sustained ability to successfully manage transactions and advisory assignments and on managing client concentrations.
4. Poor investment performance, pricing pressure and other competitive factors may reduce their revenue or result in losses in their asset management business. 
5. The business is dependent on the Group’s goodwill and ‘Nisus’ brand name.