ArthVeda STAR Fund II Investments in low-risk, Middle Income - - PowerPoint PPT Presentation

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ArthVeda STAR Fund II

Investments in low-risk, Middle Income Residential Real Estate Developments across India

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Index

About ArthVeda and Group Offshore Investors can now invest in the STAR investment strategy What makes an investment in Real Estate Residential Development profitable? STAR Fund I Domestic Fund for Mid Income Housing in Metro Outskirts and Tier 1/2 Cities (Genesis of the ArthVeda residential real estate investment strategy) STAR Fund II – Investment Proposition Appendices Opportunities & Constraints in Mid Income Housing DHFL presence in target locations STAR Fund I: Project Highlights DREAM Fund: Investment Summary Tax Efficiency of Pooling Locations Offshore Set-up for STAR Fund II

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Index

About ArthVeda and Group Offshore Investors can now invest in the STAR investment strategy What makes an investment in Real Estate Residential Development profitable? STAR Fund I Domestic Fund for Mid Income Housing in Metro Outskirts and Tier 1/2 Cities (Genesis of the ArthVeda residential real estate investment strategy) STAR Fund II – Investment Proposition Appendices Opportunities & Constraints in Mid Income Housing DHFL presence in target locations STAR Fund I: Project Highlights DREAM Fund: Investment Summary Tax Efficiency of Pooling Locations Offshore Set-up for STAR Fund II

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ArthVeda is a Real Estate Focused Fund House in India

Fund Name Details DREAM FUND I

• Closed in 2006 with focus on residential properties in Metros and Tier 1 cities
• The fund has an AUM of US$ 17 mil (INR 1 bil)*. Returns were re-invested and exits for round 2 are also completed
• Exited fully in June 2015
• Exits ranged between 7% - 45% (INR returns)
• Gross return to the investor of 14.75% CAGR (before fees and expenses)

STAR FUND I Housing for Middle Income Households (in association with DHFL)

• Launched in 2012 with a focus on mid-income housing in tier 2 and tier 3 cities
• Final Closure in May 2015
• Fund is in deployment phase with AUM of US$ 23 mil (INR 1.4 bil)*
• Target Gross Return (Project Level): 30% in INR
• 2 Exits already achieved with IRRs in excess of 31%
• The fund is expected to exit 70% of its AUM by Mar-2016

STAR FUND II (in association with DHFL)

• This will be ArthVeda’s 3rd Real estate fund
• Scaled up version of the existing Star Fund I
• The fund will focus on Residential Projects targeted at middle income households
• Target fund size ~USD 250 mil (INR 15 bil)
• The Fund will be managed in conjunction with DHFL

ASHA FUND Housing for Low Income Households (in association with Aadhar)

• This will be ArthVeda’s 4th Real Estate Fund and will be launched in June 2015
• The fund will invest in Residential Projects for Low Income Groups in Tier II/III cities and Metro Outskirts
• The fund will be targeted only towards large domestic investors in India such as Banks, Insurance Companies and

Family Offices

• This fund will be launched and managed in conjunction with AHFL

* 1 USD = 60 INR AUM = Assets Under Management; DHFL = Dewan Housing Finance Corporation Ltd AHFL = Aadhar Housing Finance Limited DHFL and Aadhar are Group companies of ArthVeda. Details available in later sections

ArthVeda investments have been deployed in over 6 million sqft of real estate development

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ArthVeda Specializes in Low/Mid Income Housing Investments

*To be launched in FY15-16 SEBI = Securities and Exchange Board of India

Headed by Mr. Bikram Sen Former CEO of DHFL

ArthVeda Fund Management Pvt Ltd (AVFM)

Real Estate Vertical Traded Markets Vertical Dream Fund I Focused Real Estate Fund Star Fund I Middle Income Housing with focus on Tier II/III Cities

Asset Management Company regulated by SEBI

Alpha Strategy Funds Strategies for Global & Indian Equities Star Fund II* Investing in Mid Income Residential Projects Asha Fund* Low Income Housing with focus

• n

Tier II/III Cities

Low Income Housing Fund Mid Income Housing Funds

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ArthVeda is part of a Leading Financial Services Group in India

ArthVeda Fund Management Pvt Ltd

Financial Services Group

Dewan Housing Finance Corporation Ltd (DHFL) DHFL Vysya Housing Finance Ltd Aadhar Housing Finance Ltd DHFL Pramerica Life Insurance

• 2nd largest private sector

mortgage finance company in India with a sound track record of 30 years

• Specializes in mortgage

finance & construction funding to Lower & Middle Income segment

• Key shareholders: 34.95%

with Wadhawan family & their entities

• Specializes in

mortgage finance to lower & middle income segment

• Key shareholders:

DHFL with 9.47% and 85.34% with Wadhawan family & their entities

Specializes in managing Low/Mid Income Housing Real Estate Investments across Metros, Tier 1 and Tier 2 cities

• JV with IFC

Washington

• Exclusive focus on

low income segment

• Deep penetration in

Tier II/III cities of India as well

• Key shareholders:

DHFL with 14.90% and 64% with Wadhawan family & their entities

• JV with Prudential

International Insurance Holdings Ltd.

• Life Insurance

provider

• Key shareholders:

DHFL with 50% and 24% with Wadhawan Family entities

Pyramid based on the loan ticket size

Avanse

• JV with IFC

Washington

• Education loan

provider

• Key shareholders:

DHFL with 48.50%, IFC with 20% and remaining 31.50% with Wadhawan family & their entities

> USD 16,667 USD 8,333 – 16,667 USD 5,000 – 8,333 < USD 5,000

DHFL Aadhar Housing DHFL Vysya Spanning the entire end-user financing in Indian real estate

JV = Joint Venture; IFC = International Finance Corporation

100% Owned by Promoters of DHFL DHFL Prameica Asset Managers

• JV with Prudential

Financial Inc.

• Manages Mutual

Funds

• Key shareholders:

50% with Wadhawan Group

• This is a proposed JV

and SEBI approval is awaited

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DHFL – The flagship company of the Group

Deep penetration into Low/Middle Income Households across India

2nd Largest Private Sector HFC in India

• 30 years of sound track record
• Listed on National Stock Exchange

(NSE) and Bombay Stock Exchange (BSE)

• Credit Rating of AAA by CARE
• Regulated by National Housing Bank

(NHB) Housing & Construction Finance to Low/Mid Income

• Loan Book of ~USD 9.5 billion as of

31st March 2015

• Focus on Low/Mid Income

Households

• Disbursements in Tier II and Tier III

cities and Towns 736 Locations across India*

• ~80% of distribution footprint in Tier II

& Tier III cities and Towns

• Each branch has
• Credit Team
• Sales Team
• Technical Team
• Accounts Team

* As of 31st Mar 2015. Includes 364 self-operated locations and 372 locations through alliances HFC = Housing Finance Company 1 USD = 60 INR

1,200 20,000 INR ('000) USD Average Size of an Individual Loan (as of Mar ‘15)

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Aadhar – Housing Finance for Low Income Households

JV between DHFL and IFC Washington

• Established in 2011
• India’s first low-income segment

focused HFC

• Offers home loans to low income

salaried and self-employed individuals

• Registered as an HFC and regulated

by the NHB Catering to Low Income Households^

• 75% of customers earn below $

500/month (INR 30,000)

• 23% of customers are self-employed
• Monthly Household Income of Target

Customers: US$ 85 – 420 (INR 5,000 – 25,000) Deep Penetration in Low Income States*

• Present in 9 States and now plans to

go pan-India

• 63 Branches
• 267 locations

HFC = Housing Finance Company; IFC = International Finance Corporation; JV = Joint Venture 1 USD = 60 INR *As of Mar 15

10,667 20,000 Average Ticket Size Maximum Loan Limit Figures in USD 640 1,200 Average Ticket Size Maximum Loan Limit Figures in '000 INR

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Synergies among Group Businesses

ArthVeda

Low & Mid Income Households Low & Mid Income Housing Projects

DPLI DPAM DHFL DHFL Vysya Aadhar

DPLI = DHFL Pramerica Life Insurance DPAM = DHFL Pramerica Asset Managers

Purchase by these households enables exit of ArthVeda from its investments Provides Equity Finance

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An Unparalleled Understanding of Risks in Low/Mid Income Housing

Group has acquired a deep understanding of risks in Low/Mid Income Residential Segments over the last 30 years as part of its Lending Operations Risk evaluation at end-customer level

• Micro-market demand assessment from Group companies

loan disbursement data

• Customer knowledge and database of Group companies

Risk evaluation at Project level

• Partner assessment (peer review)
• Cost controls
• Audit of accounts
• Financing viability
• Project monitoring

Risk evaluation at land acquisition level

• Legal due diligence
• Regulatory due diligence
• AAA rating to DHFL from CARE is a testimony to the best-in-class risk management track record of the Group
• Gross non-performing assets in the range of 0.71 – 0.78% amidst a sluggish economy and in a high risk industry

The Group is providing mortgage finance on a daily basis in micro- markets across India with one of the lowest NPAs in the industry

CARE is the 2nd largest credit-rating agency in India DHFL = Dewan Housing Finance Corporation Ltd.

Low Risk High Return High Risk High Return Risk Identification Risk Elimination Risk Mitigation Risk Management Returns Maximization

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ArthVeda Leverages its Group’s Strengths

• Readymade customer base due to deep penetration into Low/Middle Income

households

• Group credibility of having lent more than USD 25 Billion to the real estate sector over

the last 30 years (Current outstanding: ~USD 9.5 bil)

• A pan-India group presence in 736 locations with 5,000+ employees*
• About 300 Builders as borrowers across India

* Including on-roll and off-roll employees. Data as of 31st March 2015 DHFL = Dewan Housing Finance Corporation Ltd

Inherent Group Strengths

Due to presence in micro markets, we have:

• Familiarity with most of the Real Estate Developers
• Country-wide empanelment of Advocates, Architects, Valuers etc.
• Access and understanding of the latest on-ground knowledge of costs and prices

across micro-markets

• Expertise in monitoring investments and stepping in at the first sign of any problem

Avanse DHFL Vysya Aadhar DHFL

ArthVeda

We lend more than USD 350 mil every month across India

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We are a Unique Real Estate Fund House

Profitable investments in Low/Mid Income Housing strongly enabled by Group Strengths We are the only Real Estate Fund with diverse capabilities and industry relationships in the Real Estate Severe entry barriers for other funds into Low/Mid Income Housing

Pan-India presence

• f DHFL and Aadhar

(The dots in the map indicate DHFL offices and the grey highlighted areas represent Aadhar’s area of coverage)

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Index

About ArthVeda and Group Offshore Investors can now invest in the STAR investment strategy What makes an investment in Real Estate Residential Development profitable? STAR Fund I Domestic Fund for Mid Income Housing in Metro Outskirts and Tier 1/2 Cities (Genesis of the ArthVeda residential real estate investment strategy) STAR Fund II – Investment Proposition Appendices Opportunities & Constraints in Mid Income Housing DHFL presence in target locations STAR Fund I: Project Highlights DREAM Fund: Investment Summary Tax Efficiency of Pooling Locations Offshore Set-up for STAR Fund II

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Fund Terms

Fund Size USD 250 mil (INR 15 bil) Investment Cap Capped at 15% of the fund size (Deviation only after specific approval from IC) Target Investments 35-40 investments in quick turnaround projects across Metros, Tier 1/ Tier 2 Cities

• ~40% of the funds to be deployed within MMR
• ~50% of funds deployed in other Metros & Tier 1 cities (Delhi (NCR), Bangalore, Chennai,

Pune, Hyderabad, Kolkata)

• Rest of the funds to be deployed in other Tier 1/Tier 2 cities
• Co-investment with other funds can be considered
• Deviation of 25% of AUM deployment at Fund Manager’s discretion

Target Gross IRR* 25-28% in INR (18-21% in USD*) at Project Level Fee Structure Set-up fees: 0.5%; Management Fees: 2.0% p.a. of commitment (charged quarterly in advance); Carried Interest: 20.0% (with catch up); Hurdle rate: 12.0% in INR Minimum Commitment USD 500,000 Project Duration ~48 months for >75% of investments (with a maximum extension of 12-18 months) ~60 months for ~25% of investments (with a maximum extension of 12-18 months)

*Target Gross IRR is before fees and taxes (at Fund-level); USD Returns are illustrated assuming 7% depreciation of INR against USD; Actual results might differ from these calculations depending on exchange rate fluctuations 1 USD = 60 INR

Fund Tenure 5 years +1+1 from the final drawdown date Drawdown and Closure Closure, Drawdown and Fund Timeline discussed in more detail on next page Investment Ticket Size Range: ~USD 5 – 12 mil (INR 300 – 720 mil ); Average : USD 7 mil (INR 420 mil)

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Fund Timeline

1st Closure 3 months* Within 12 months 48 months^ 12 months Final Closure 6 months* Within 12 months 48 months^ 12 months

Fund Raising Drawdown Investment Period Exit

*1st Closure

3 months or commitments of USD 100 mil (INR 6 bil), whichever is earlier

*Final Closure

6 months from the first closure or commitments of USD 250 mil (INR 15 bil), whichever is earlier

^Investment Period

~48 months for >75% of investments (with a maximum extension of 12 -18months) ~60 months for ~25% of investments (with a maximum extension of 12 -18 months)

1 USD = 60 INR

Drawdown

Drawdown will be in a maximum of 5 tranches varying between 20% and 60%. The entire corpus would be drawn down within 12 months of the commitment.

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Investment Theme for STAR Fund II

Investment Type % Allocation Average Duration of Investment Type A (fast turnaround projects) Projects between 250 and 600 K sqft 75-80% ~3.5 years Type B (Projects larger than Type A) Projects between 600 and 900 K sqft 20-25% ~5.5 years Fund Level (Average) 100% ~4.5 years

Investments to be concentrated in fast turnaround projects FDI compliant, Middle Income Housing projects only Target investments only in projects with ‘low land-to-sales value’ Investment cap of 15% of fund size in single project 25% deviation allowed from proposed strategy as per Fund Manager’s discretion Diversification across cities/micro-markets of India and across developers

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Potential Investment Destinations*

Source: Prop Equity, ArthVeda *Potential Investments have been identified by targeting <10% of the Mid Income units absorbed during 2011-YTD 2014. Only FDI compliant, Middle Income Housing Projects conforming with STAR II Fund’s investment strategy have been considered. Micro-markets with limited availability of land have NOT been considered. MORE DETAILS IN APPENDICES.

Total No. of Units Total Area (sqft)

• No. of Investments

Average Project Size (sqft)

Greater Mumbai Dahisar to Andheri 238 250,000 1 250,000 Sion to Mulund 362 362,203 1 362,203 Godbunder Road/Thane 772 694,848 2 347,424 Dahisar to Vasai 783 626,259 2 313,130 Panvel & Beyond 1,214 1,092,797 2 546,398 Vasai to Virar 1,186 889,753 2 444,876 Kalyan/Karjat/Bhiwandi 1,765 1,500,000 3 500,000 Total Mumbai 6,320 5,415,859 13 416,605 Bangalore East Bangalore 468 654,845 1 654,845 North Bangalore 864 1,209,049 2 604,525 South Bangalore 1,385 1,800,000 3 600,000 Total Bangalore 2,716 3,663,894 6 610,649 Rest of India Gurgaon 1,222 1,710,592 3 570,197 Chennai 2,101 2,311,463 4 577,866 Pune 2,550 2,294,761 4 573,690 Ahmedabad 913 1,003,833 1 1,003,833 Kolkata 734 806,853 1 806,853 Jaipur 650 844,759 1 844,759 Coimbatore 508 711,551 1 711,551 Hyderabad 546 764,883 1 764,883 Lucknow 586 819,936 1 819,936 Total Rest of India 9,809 11,268,632 17 662,861

TOTAL 18,845 20,348,385 36 565,233

Type A Investments Type B Investments

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Proposed Investment Summary

Fund Level Type A Type B^

• No. of Investments

36 27 9 % Breakdown 75% 25% Average Investment Ticket Size (INR mil) 420 556 323 Average Investment Ticket Size (USD mil) 7.0 9.3 5.4 Expected weighted average IRR (in INR) 25-28% 22-28% 28-30% Expected weighted average IRR (in USD)* 18-21% 15-21% 21-23% Target Average Investment Period (Years) 4.5+1+1 3+1+1 5+1+1

• No. of cities and micro-markets

19 11 8 Total No. of Units 18,845 13,578 5,268 % Breakdown 72% 28% Total Area (sqft) 20,348,385 13,532,676 6,815,709 % Breakdown 67% 33% Average Area per Project (sqft) 565,233 501,210 757,301

1 USD = 60 INR * USD Returns are illustrated assuming 7% depreciation of INR against USD; Actual results might differ from these calculations depending on exchange rate fluctuations ^ Type B investments are most likely to be done in non-Metros and non-Tier 1 cities

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Investment Strategy

The fund will seek investments primarily in quick-turnaround, middle income residential real estate development projects in Metros, Tier 1/Tier 2 cities of India satisfying the following criteria:

• Land bearing clear titles and possession rights
• Expected IRRs of 25-30% in INR (18-21% in USD*)
• Invest in project sizes between 250,000 – 900,000 sqft
• Projects above 600,000 sqft will be few and evaluated extra carefully
• Target no of units in proposed micro-markets NOT to exceed 10% of the market demand
• The project construction and absorption has a near-certainty of completion within 5 years
• Investments in micro-markets which have witnessed high absorption rates historically
• No investments in projects of group companies
• FDI-compliant projects

Investment Criteria

FDI = Foreign Direct Investment * USD Returns are illustrated assuming 7% depreciation of INR against USD; Actual results might differ from these calculations

• ~48 months for >75% of investments (with a maximum extension of 12-18 months)
• ~60 months for ~25% of investments (with a maximum extension of 12-18 months)

Investment Period

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Risk Management at Fund – level

Risks Risk Management A Investment Committee comprising of credible and experienced professionals including independent, non-group members

Entry risk

• Risk of delay in fund deployment
• Risk of entering at un-attractive valuations
• Downside risk to IRR
• Strong deal pipeline
• Leverage DHFL relationships
• Tie-ups with real estate IPCs
• ‘Low land-to-sales value’ and high profit margin

Control risk

• Inadequate control over investment

property

• Invest through majority-stake in Special Purpose Vehicle (SPVs) ensuring legal and
• perational control
• Fund investments to account for minimum 51% of the overall project equity
• Structuring to ensure full control of investments (in case of co-investments)

Concentration risk

• Risk of loss due to inadequate

diversification of projects, locations and tenants

• Risk due to economic downturn
• Diversification across 35-40 projects in Metros, Tier 1 and Tier 2 cities of India
• Diversified target household mix in terms of occupation and income stream minimizing

downside risk due to economic downturn

• Cap of 15% allocation to single investment

Tax risk

• Risk of high taxes and low returns
• Tax efficient fund structuring and location of off-shore pooling vehicles

Exit risk

• Liquidity risk
• Low IRRs due to delay in exit
• Targeting <10% market share of the total absorption within the city and our target ticket size
• Project size between 250,000 – 900,000 sqft
• Residential market is most liquid within Indian real estate
• Projects in micro-markets with high absorption velocity
• Sale to other strategic investors
• Demand volumes and pricing assessment through extensive research of micro-markets by

leveraging on-ground channels of DHFL A reasonably good estimate of cash flows for hedging will be provided by the investment management team at the inception of investments and periodically in the following formats:

• Cash flows statements
• Quarterly reports
• Third party valuation reports

Currency risk

• Risk to IRR due to currency fluctuations
• Risk to IRR due to inadequate hedge

IPC = International Property Consultant; NCR = National Capital Region

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Risk Management at Asset – level

Phases Associated Risks Risk Management Steps

Land Acquisition

• Purchase land in desired location
• Legal risks due to

unclear titles

• Land with clear titles only
• Thorough technical, legal and regulatory due diligence by
• Reputed consultants
• ArthVeda’s existing in-house team, which has

successfully invested in and exited from 15+ residential projects across India

• Tie-up with reputed developers with proven track record
• Leveraging DHFL’s understanding of local regulations
• External consultants to assist in legal & regulatory due

diligence Approvals

• Approvals from local regulatory

bodies for the project

• Regulatory risks
• Legal risks
• Project delay risk

Construction & Development

• Manage project timeline and costs
• Cost Overrun risk
• Project Delay risk
• Continuous monitoring by on-field, regular visits
• Leveraging on-ground forces of DHFL
• Tie-ups with back-up developers (in-house development

capabilities through group companies)

• Budgeting before project commencement
• Regular audit of finances of SPVs
• Full control over critical management decisions
• Project monitoring by External Consultants

Sales/leasing of property

• Search buyers/tenants
• Liquidity risk
• Targeting <10% market share in each city
• Project size between 250,000 – 900,000 sqft
• Projects in micro-markets with high sales velocity
• Mortgage finance through DHFL, the 2nd largest private

sector mortgage finance company in India

• Sales enhancement through group’s property marketing

agency (DHFL Property Services)

• Sale to fund investors

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Investment Process

SELECTING MICRO-MARKETS (With DHFL)

• Backed by ArthVeda’s strong

research

• Group company insights to identify

lucrative micro-market and demography

• Demand supply gap
• Low land price to sales value
• High absorption by the micro-

market demography TERM SHEET FINALIZATION

• Negotiations & Deal Terms
• Internal review of business plan

DEAL MONITORING (With DHFL) Monitoring through site visits and local presence of DHFL for

• Construction progress
• Operations
• Finances of SPVs
• Sales

Project monitoring to be carried in conjunction with External Consultants DEAL SOURCING & FILTERING (With DHFL)

• Fund Management Team through

direct contact with developers

• Project team of DHFL
• Through real estate IPCs
• Focus on quick-turnaround

projects DEAL STRUCTURING

• Investment through SPVs
• Structure to ensure majority control

and tax efficiency EXIT

• Opportune market conditions
• Facilitating mortgage finance through DHFL
• Sales enhancement through DHFL Property Services
• Sale to strategic investors and fund investors

Faster exits due to:

• Residential market is most liquid within Indian real estate
• Targeting <10% market share in each micro-market
• Project size between 250,000 – 900,000 sqft
• Projects in micro-markets with high sales velocity

DUE DILIGENCE (With DHFL)

• Legal due diligence &

establishment of possession rights

• Technical and regulatory due

diligence

• Financial & commercial due

diligence IC APPROVALS

• Investment Managers
• Investment Committee

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Value Proposition

Minimize risk by leveraging strengths of group companies in the entire investment process

Selecting Micro-markets Deal Sourcing & Filtering Technical, Legal & Financial Due Diligence Deal Structuring Equity Investments Construction Sales

AVFM adopting best-in-industry Operating Process of DHFL AVFM AVFM, IPCs and approved developer base AVFM leveraging on-ground teams

• f DHFL

Development Partner Development Partner AVFM and Legal Partner Advisor Construction finance by DHFL possible Housing Finance by DHFL possible Project monitoring done by AVFM and DHFL Sales enhancement by DHFL Property Services

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Collaboration with DHFL

Why collaboration?

• DHFL has its lending branches in all target locations for STAR Fund II
• Each branch has marketing & sales team, credit teams, panel of advocates, civil engineers/technical officers
• Fund Managers of STAR Fund II will work, independently and in conjunction with DHFL branch staff, in all target locations
• Sr. No.

Type/Purpose Details of Service Contents 1. Deal Generation

• Short-listing of developers with good track record and reputation

2. Legal, Technical and Commercial Due Diligence Fund Managers of STAR Fund II will work, independently and in conjunction with branch offices, on following areas:

• Branch panel advocates for legal due diligence
• Branch technical officers for technical due diligence
• Branch marketing & sales for commercial viability

3. Monitoring Fund Managers of STAR Fund II to monitor, independently and in conjunction with branch offices, the following:

• Construction progress
• Velocity of sales
• Price of sales

Expediting sales: STAR Fund II has access to the Sales & Marketing Services of DHFL Property Services to complete/expedite sales of housing units, if required Project completion: STAR Fund II has access to the Project Management Services of DHFL Technical Team to complete any unfinished projects, if required

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Board of Directors (1/2)

Bikram Sen (Director & Chief Executive Offi fficer, ArthVeda) – Wholetime Director

• Over 33 years of experience in Global Investment Banking and Mortgage Finance
• Former CEO of DHFL. Propelled DHFL from an asset book of ~ $ 300 mil to ~ $ 2.5 bil
• Former Managing Director of Chemical Bank, Tokyo
• Led the acquisition of Deutsche Postbank Home Finance adding another $ 1.5 Bn to DHFL’s asset book
• Worked for companies such as American Express, Chemical Bank (now J P Morgan Chase) and SBI and large fund houses like

Quantum Fund (George Soros) and The Chatterjee Group

DPLI = DHFL Pramerica Life Insurance

Harshil Mehta (Chief Executive Office, DHFL)

• Over 15 years of leadership experience across diverse financial services functions including credit appraisal, operations and

service quality

• Headed ICICI Home Finance as the Managing Director & CEO
• Previously worked with prominent entities like Transamerica Commercial Finance (Chicago), a leader in Inventory Financing &

Fortune 500 Company and Whirlpool (India)

• MSc from Mumbai University and an MBA (Finance) from Graduate School of Business, Mississippi State University, USA

Kapil Wadhawan (Chairman & Managing Director, DHFL)

• Post graduate Masters in Business Administration (specializing in Finance) from Edith Cowan University, Perth, Australia
• Led robust growth of DHFL making it a leading mortgage lending company in India
• Great knowledge and understanding of real estate and financial markets in India

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Board of Directors (2/2)

Lalit Kant (Director & Executive Vice President - Operations) – Wholetime Director

• Over 32 years of experience in the banking industry
• Initial years with SBI at various centres and was associated with Product Development at the Corporate Centre
• Later with Siam Commercial Bank, PCL, (a leading bank of Thailand) for over 16 years ; served as their General Manager and

Country Head, India

• Post-graduate from the Delhi School of Economics and a Certified Associate of the Indian Institute of Bankers

Deo Shankar Tripathi (Chief Executive Officer, Aadhar Housing Finance Ltd)

• Over 18 years of experience in the Commercial Banking Industry
• Before Aadhar, he was COO of DHFL
• He joined the Union Bank of India in 1977 as Probationary Officer and held diverse positions, managing varied portfolios before

being elevated to the level of Top Executive Grade

• Mr. Tripathi has managed varied roles covering Corporate Finance & Credit Management, Retail Banking, NPA Management,

Rural Banking, Resources Mobilisation, Customer Relationship Management, Branch Network Expansion and HR Management

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Investment Committee

Ravishankar G (Member – Finance, Rajesh Wadhawan Group Management Centre)

• Chartered and Cost Accountant with about 25 years of experience in Corporate Finance, Risk Management and Mergers &

Acquisitions, including integration and working with joint ventures

• His experience spans different industries including automotive, financial services, healthcare and airlines
• Worked as MD/CxO levels in organizations like Jet Airways, Geometric, GE Healthcare, etc
• Graduate of the prestigious 'Experienced Financial Leadership Program' at General Electric
• Successfully completed the Advanced Management Program at Kellogg’s University on 'adding value to Share Holders‘ and also

a Member of the Coaching Federation of India and Result Coaching Systems, India Lalit Kant (Director & Executive Vice President - Operations, ArthVeda)

• Over 32 years of experience in the banking industry
• Initial years with SBI at various centres and was associated with Product Development at the Corporate Centre
• Later with Siam Commercial Bank, PCL, (a leading bank of Thailand) for over 16 years ; served as their General Manager and

Country Head, India

• Post-graduate from the Delhi School of Economics and a Certified Associate of the Indian Institute of Bankers

Harshil Mehta (Chief Executive Office, DHFL)

• Over 15 years of leadership experience across diverse financial services functions including credit appraisal, operations and

service quality

• Headed ICICI Home Finance as the Managing Director & CEO
• Previously worked with prominent entities like Transamerica Commercial Finance (Chicago), a leader in Inventory Financing &

Fortune 500 Company and Whirlpool (India)

• MSc from Mumbai University and an MBA (Finance) from Graduate School of Business, Mississippi State University, USA

Omar Farooqui (Managing Partner, CI Holdings) – Investment Committee Observer

• With 17 years of experience in the MENA region investment, and in addition to founding CI-Holdings, Omar is also a Co-Founder
• f Green Sands Capital
• He serves as Global Strategy Advisor for Saudi Fransi Capital
• Previously, he has worked at Algebra Capital, Deutsche Asset Management and National Commercial Bank Investment Services
• Omar holds a Masters in Financial Structuring from University of Surrey in UK, and a Bachelor in Management and Marketing.

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Team

Real Estate Traded Markets Compliance Ashwini Shami Lead Research Analyst Varun Sood Senior Research Analyst Viraj Vajratkar Investment Strategist Satish Sawnani Head – Compliance HR & Admin Krishna J. Verma

• Sr. Vice President

Pankaj Bagla Principal Rajeev Saraogi Principal To be hired Principal Deval Gupta AVP - Investments Shikha Singh Manager - Investments Analysts 3 Analysts to be hired Harish Gagwani Fund Manager Legal Bhaskar Guha

• Asst. Vice President

Shuchi Pandey Assistant Manager Technical Arun Sohani Head – Technical Deepti Baru Manager - Projects STAR Fund I & II DREAM Fund Kshitij Gupta Principal Mithun Nyalkalkar Sr Manager ASHA Fund Operations Rajiv Maheshwari Chief Investment Officer

• Dr. Vikas V Gupta

Executive Vice President Lalit Kant Executive Vice President Due Diligence Teams Fund Raising / Investor Relations Anand Varadarajan

• Asst. Vice President

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STAR Fund II Team (1/2)

Rajeev Saraogi

• At present, managing projects to the tune of $100 million* for STAR Fund I
• Over 12 years of experience in real estate financing and appraising real estate projects of over $ 300 million
• Chartered Accountant and Certified Business Valuer from ICAI, Argus Certified Professional
• Previously worked with ICICI Bank in Real Estate Finance Group sourcing and appraising corporate and real estate projects

Pankaj Bagla

• Qualified Chartered Accountant with 12+ years of work experience
• 3 years with EY (Bahrain) in Audit Practice and 1.5 years with KPMG Financial Due Diligence Practice
• Last 7.5 years of work experience in managing the real estate portfolio of an Ultra-HNI Family House, where he specialized in

exiting/monetizing the value of real estate assets

* Based on project valuation of 11 investments in terms of sales revenues

Rajiv Maheshwari

• Over 18 years of work experience in managing Real Estate Investments, Property Valuations, JV Structuring/Transaction

Advisory

• Has directly managed Real Estate Investments of ~USD 333 mil (INR 20 bn) in his previous role
• Previously worked with organizations like IL&FS Investment Managers, ICICI Bank, Jones Lang LaSalle and Richard Ellis

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STAR Fund II Team (2/2)

Shikha Singh

• Currently handling fund deployment and asset management for Star Fund I
• Experience of over 5 years in Private Equity and transaction Advisory with a focus on Real Estate
• Experience in Debt and Equity syndication for SME clients across varied verticals like Real estate, Retail, Healthcare,

Engineering, Print Media, Food and Agro Industry

• MBA in Finance and Marketing with a Gold Medal from International Management Institute, Belgium

Deval Gupta

• Currently, functioning as Investment Manager for Star Fund I
• Over 6 years of experience in Real Estate Investment Management, Investment Banking, Corporate & Project Finance
• Rich experience in evaluating & investing in Real Estate
• PGDBA with a specialisation in finance

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Index

About ArthVeda and Group Offshore Investors can now invest in the STAR investment strategy What makes an investment in Real Estate Residential Development profitable? STAR Fund I Domestic Fund for Mid Income Housing in Metro Outskirts and Tier 1/2 Cities (Genesis of the ArthVeda residential real estate investment strategy) STAR Fund II – Investment Proposition Appendices Opportunities & Constraints in Mid Income Housing DHFL presence in target locations STAR Fund I: Project Highlights DREAM Fund: Investment Summary Tax Efficiency of Pooling Locations Offshore Set-up for STAR Fund II

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Fund Structure

Various Jurisdictions Mauritius India EU Mauritius Fund

EU Based SPV

Investment Manager Management Shares Offshore Investors Portfolio Companies Portfolio Companies Debt Investments Equity Investments Participating Shares Participating Shares Investment Adviser Advisory services Pooling vehicle can be either Mauritius or Luxembourg, depending on the structure of the investment (equity or debt or convertibles)

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Tax consideration between Mauritius and Luxembourg

Mauritius Luxembourg

Treatment of Capital Gains A tax resident of Mauritius is exempt from capital gains tax arising on the sale of shares of an Indian company under the tax treaty Capital gains tax rate in Mauritius: 0% The tax treaty between India and Luxembourg does not exempt a Luxembourg resident entity from capital gains tax from the sale of shares of Indian companies Therefore, a Luxembourg resident will be taxed in India for capital gains arising from sale of shares of Indian companies as per applicable rates Interest There is no relief under the India- Mauritius tax treaty in respect of the withholding tax rate on interest payments 10% (as per the provisions of the India-Luxembourg tax treaty) Corporate Income Tax Rates 3% / 0% (depending of extent of foreign tax credits) Luxembourg investment funds are generally not subject to Luxembourg income taxes General Comments Mauritius has emerged as favorite destination for offshore funds investing into India The tax treaty between India and Mauritius has been stable and is expected to remain stable in the future Reputed and established jurisdiction for pooling capital from European investors Dividends 0%. (However, portfolio companies in India will be subject to a dividend distribution tax at 20.47%)

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Partners

Consultants External to Group

• Pre-Investment assessment of commercial viability: IPCs
• Project monitoring: PMC*

Statutory Auditors for Offshore Pooling One of the Big 4 Valuations (Annual) IPCs Tax Advisors Chaturvedi & Shah Indian Investee Company SPVs to be set up for individual investments Deal pipeline generation

• Fund Management Team
• Project team of DHFL
• Through real estate IPCs
• Real Estate consulting practices of Big 5

Investment Committee Refer to Slide 26 Fund Set-up, Accounting, Administration & Banking CIM Global/Equinox Statutory & Concurrent Auditors for Investee Companies (SPVs) Chaturvedi & Shah Legal Advisors Nishith Desai Associates / IC Legal

*Project Management Consultants (PMC) like Calcon Consultants International, NIVCON Associates, Optimus Engineering Pvt. Ltd., Property Solutions (I) Pvt.Ltd., etc

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Index

About ArthVeda and Group Offshore Investors can now invest in the STAR investment strategy What makes an investment in Real Estate Residential Development profitable? STAR Fund I Domestic Fund for Mid Income Housing in Metro Outskirts and Tier 1/2 Cities (Genesis of the ArthVeda residential real estate investment strategy) STAR Fund II – Investment Proposition Appendices Opportunities & Constraints in Mid Income Housing DHFL presence in target locations STAR Fund I: Project Highlights DREAM Fund: Investment Summary Tax Efficiency of Pooling Locations Offshore Set-up for STAR Fund II

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STAR Fund I: Investment Summary

Commitment Amount INR 1.4 bil (USD 23 mil) Investment Ticket Size INR 1 mil (one-time) or staggered drawdown for INR 10 mil and above Fund Tenure

• 3 years (option of extension of 2 terms each of 1 year) after complete drawdown
• Commitment period of 6 months from the date of final closure

Target Gross IRR* 30%+ in INR

1 USD = 60 INR *Expected Gross IRRs are in INR. IRR are before fund fee or taxes but includes all incidental costs related to construction including construction finance cost

Developer / Project Name Location Project Size (sqft) Investment (INR mil) Investment (USD ‘000) Expected Gross IRR* Status Pranav Arupadai Chennai 25,794 43.5 725 31.00% Exited Tarangan Nagpur 400,000 150.0 2,500 35.25% Invested Blue Monarch Lucknow 163,000 77.0 1,283 >36.00% Invested Park Ville Hyderabad 153,280 100.0 1,667 33.00% Exited INNOVA Chennai 230,640 100.0 1,667 35.00% Invested Aaloha Bangalore 302,700 105.0 1,750 >38.00% Invested Laxmi Nivas Guntur 75,882 50.0 833 35.00% Invested Laxmi Towers Guntur 181,000 95.0 1,583 35.00% Invested Drongiri Mumbai Outskirts 92,000 90.0 1,500 35.00% Invested Pate Pune - suburbs 500,000 175.0 2,917 35.00% Invested Dreamz Chennai 88,024 50.0 833 35.00% Invested Pipeline Damden Properties Bangalore 400,000 75.0 1,250 35.00% At due- diligence stage Sowparnika Projects Bangalore 400,000 150.0 2,500 35.00% Trukon Housing Mumbai Outskirts 1,000,000 150.0 2,500 35.00%

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STAR: A testimony to a well researched investment strategy

Quick turn-around projects with fast exits

Proof-of-concept that best risk-reward exists consistently in mid-income housing in every location across India

Small project sizes with small investment ticket size Low land to sales values Requires on-ground presence and relationships with stakeholders across India STAR Fund invests in Mid Income Housing projects across India Mid Income Housing projects have the best absorption across India STAR Fund has the shortest fund tenure amongst all Real Estate Funds Diversification across pan-India locations and multiple builders Highest IRRs with downside protection Only ArthVeda can execute this strategy because of its Group strengths

STAR’s investment strategy hits the “Sweet-Spot” in terms of diversification, high returns and short fund life

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Why invest in Mid Income Housing?

Premium Housing Middle Income Housing

Sweet Spot in Indian Real Estate High returns with relatively lower risks

Low Income Housing

• High cyclicity
• High average investment ticket size
• Low secular demand
• Low absorption
• High risk, low return segment
• Low cyclicity
• Low average investment ticket size
• High secular demand
• High absorption
• Low risk, high return segment
• Huge secular demand
• Projects unviable in cities because of

high land-to-sales price

STAR Funds invest here

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Why restrict to small project sizes?

Project Size (Sqft) Unit Size (Sqft)

• No. of Units

Project Life (years) Sales Velocity (per month) 600,000 1,000 600 4 13 600,000 1,500 400 3 11 900,000 1,000 900 5 15 900,000 1,500 600 4 13

• Difficult to achieve sales velocity of higher than 10-15 units per month in one project
• Sweet spot lies in project sizes between 400 and 600 K sqft
• Projects of 900 K sqft can also be profitable but entail higher exit risk
• Longer project durations imply investment period of more than 5 years increasing the investment risk

Small scale projects are invariably safer across India

Launches since 2009 Absorption (Units) Absorption (Rate) Ultra Small 3,791 73% Small 6,140 59% Complex 76,282 46%

Small scale projects have the highest absorption rate*

Source: REIS, Jones Lang LaSalle. *Above data is only for MMR Complex is the property having multiple towers sharing the same amenities. Such projects offer a higher number of units (generally more than 60) Small is the property type having a single tower with 30-60 units Ultra Small is the property type having a single tower (generally a structure with 7 or fewer residential storeys) offering 30 or fewer units. They are present in 1) premium locations and 2) sub-urban locations with no amenities and catering to lower-mid and mid-end customers

Source: ArthVeda

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STAR’s distinct and unique Investment Strategy

Investment in small project sizes Projects in Metros Outskirts, Tier 1 and Tier 2 cities Majority stake in green-field projects Project control and constant monitoring Control on land cost Small project sizes ensure faster exits Possible because of relationships of branch offices of Group companies present across India To ensure full operational control and maximize returns Leveraging Standard-Operating-Procedures and pan-India branch network of Group companies Land value not to exceed a pre-defined percentage to provide downside protection to IRRs Possible because of local knowledge and customer databases of Group companies Identifying attractive micro-market Identifying attractive price segment

Investment Strategy for Low/Mid Income Housing Investments This strategy can be executed only because of strong Risk Management and Strengths of Group companies

Diversified portfolio of assets Diversified across multiple cities, multiple micro-markets and multiple developers across India

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Index

About ArthVeda and Group Offshore Investors can now invest in the STAR investment strategy What makes an investment in Real Estate Residential Development profitable? STAR Fund I Domestic Fund for Mid Income Housing in Metro Outskirts and Tier 1/2 Cities (Genesis of the ArthVeda residential real estate investment strategy) STAR Fund II – Investment Proposition Appendices Opportunities & Constraints in Mid Income Housing DHFL presence in target locations STAR Fund I: Project Highlights DREAM Fund: Investment Summary Tax Efficiency of Pooling Locations Offshore Set-up for STAR Fund II

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New FDI regulations open opportunities for Offshore Investors

Old FDI Regulations for Real Estate Development

• Minimum project size: 50,000 sqm
• Minimum investment ticket size: USD 10 mil (INR 600

mil)

• Mid-income housing projects possible only in centers
• f Metros & Tier 1 cities
• Long project durations (7 years +)
• Only large mid-income housing projects in Metros for

FDI possible New FDI Regulations for Real Estate Development

• Minimum project size: 20,000 sqm
• Minimum investment ticket size: USD 5 mil (INR 300 mil)
• Minimum project size and tickets criteria are waived off

completely if 30% of the development is for low cost affordable housing

• Affordable housing project is defined as one with at least 40%
• f the FAR/FSI for dwelling unit of floor are less than 140 sqm

and out of the total FAR/FSI reserved for affordable housing, at least 1/4th should be for houses of floor area less than 60 sqm

• Quick-turnaround, FDI compliant, mid-income housing projects

possible in outskirts of Metros and Tier 1 cities and in centers of Tier 2 cities

• Short project durations (~4 years)
• Diversification across the country possible

FDI now possible in STAR investment strategy

1 USD = 60 INR 1 sqm = 10.76 sqft

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ArthVeda now equipped to scale up STAR Investment Strategy

Experienced, large investment management team Tried and tested investment process Systems and processes in place for project/investment monitoring Insights from STAR Fund I and ever expanding Group strengths Established relationships across India in entire Mid- Income Housing value chain

ArthVeda STAR Fund II

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Index

About ArthVeda and Group Offshore Investors can now invest in the STAR investment strategy What makes an investment in Real Estate Residential Development profitable? STAR Fund I Domestic Fund for Mid Income Housing in Metro Outskirts and Tier 1/2 Cities (Genesis of the ArthVeda residential real estate investment strategy) STAR Fund II – Investment Proposition Appendices Opportunities & Constraints in Mid Income Housing DHFL presence in target locations STAR Fund I: Project Highlights DREAM Fund: Investment Summary Tax Efficiency of Pooling Locations Offshore Set-up for STAR Fund II

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Project Economics and IRRs

Sales Rate Land and Approval Cost Cost of Construction Other expense EBITDA Case 1 30,552 9,974 2,991 1,687 15,900 Case 2 20,552 5,571 2,564 1,150 11,266 Case 3 13,802 4,284 2,137 817 6,564 Case 4 14,552 5,142 2,137 848 6,425 Case 5 6,552 1,497 1,795 547 2,713

Required project economics for attractive IRRs - Figures in INR per sqft of saleable area

Land and Approval Cost Cost of Construction Other expense EBITDA Gross Project IRR* Case 1 32.6% 9.8% 5.5% 52.0% 33.5% Case 2 27.1% 12.5% 5.6% 54.8% 39.9% Case 3 31.0% 15.5% 5.9% 47.6% 31.8% Case 4 35.3% 14.7% 5.8% 44.1% 27.1% Case 5 22.9% 27.4% 8.3% 41.4% 33.8%

Required Margins for attractive IRRs

*IRR at project level for an investment period of 5 years before any fund fee or taxes. IRR calculation includes all incidental costs related to construction including construction finance

• cost. All IRRs shown above are in INR

1 USD = 60 INR

• Project economics varies between different socio-economic regions of Metros/Tier 1 cities
• Land cost is single most important driver of project IRRs
• Land cost at ~30% of sales for markets with high selling rates generate 30%+ project IRR
• Land cost <20-25% is necessary for markets with lower selling rates to generate 30%+ project IRR

Broad relationship between land cost and IRR across India*

Sales Land and Approval Cost Cost of Construction Other expense EBITDA Case 1 509 166 50 28 265 Case 2 343 93 43 19 188 Case 3 230 71 36 14 109 Case 4 243 86 36 14 107 Case 5 109 25 30 9 45

Required project economics for attractive IRRs - Figures in USD per sqft of saleable area

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Index

About ArthVeda and Group Offshore Investors can now invest in the STAR investment strategy What makes an investment in Real Estate Residential Development profitable? STAR Fund I Domestic Fund for Mid Income Housing in Metro Outskirts and Tier 1/2 Cities (Genesis of the ArthVeda residential real estate investment strategy) STAR Fund II – Investment Proposition Appendices Opportunities & Constraints in Mid Income Housing DHFL presence in target locations STAR Fund I: Project Highlights DREAM Fund: Investment Summary Tax Efficiency of Pooling Locations Offshore Set-up for STAR Fund II

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Appendices

Opportunities & Constraints in Mid Income Housing STAR Fund I: Project Highlights DREAM Fund: Investment Summary DHFL presence in target locations Tax Efficiency of Pooling Locations

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Mid Income in Mumbai Metropolitan Region (MMR)

Region Micro-markets Region 1 South of Bandra Region 2 Andheri to Bandra Region 3 Dahisar to Andheri Region 4 Sion to Mulund Region 5 Godbunder Road/Thane Region 6 Vashi and East Region 9 Dahisar to Vasai Region 7 Panvel & Beyond Region 10 Vasai to Virar Region 8 Kalyan/Karjat/Bhiwandi

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Mid Income in MMR: Definition

Source: Prop Equity, ArthVeda. 1 USD = 60 INR

Region Micro-markets Selling Rate (INR/Sqft) Average Unit Size Average Price of Unit Absorption (2011 to YTD 2014) Min Max Average Sqft INR mil USD ‘000

• No. of Units

Region 1 South of Bandra 20,000 28,000 24,000 1,700 40.8 680 2,163 Region 2 Andheri to Bandra 15,000 18,500 16,750 1,200 20.1 335 4,303 Region 3 Dahisar to Andheri 10,800 12,300 11,550 1,050 12.1 202 9,442 Region 4 Sion to Mulund 11,500 12,300 11,900 1,000 11.9 198 7,244 Region 5 Godbunder Road/Thane 7,400 9,700 8,550 900 7.7 128 7,721 Region 6 Vashi and East 4,950 7,250 6,100 950 5.8 97 6,785 Region 9 Dahisar to Vasai 4,500 5,900 5,200 800 4.2 70 7,828 Region 7 Panvel & Beyond 4,350 4,950 4,650 900 4.2 70 18,213 Region 10 Vasai to Virar 4,400 4,500 4,450 750 3.3 55 11,863 Region 8 Kalyan/Karjat/Bhiwandi 3,100 3,550 3,325 850 2.8 47 21,944

High absorption in Mid Income Higher absorption in lower price ranges

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Mid Income in MMR: Opportunities & Constraints

*Investment potential is calculated by targeting 10% of the Mid Income units absorbed during 2011-YTD 2014 Source: Prop Equity, ArthVeda 1 USD = 60 INR

Restricted by High Land & Approval Costs & Land Availability

Regions Micro-Markets Investment Potential* Average Selling Rate Land & Approval Cost

• No. of

Units Total Project Size (sqft)

• No. of

Projects Project Size per project (sqft) INR/Sqft USD/Sqft As % of Sales Region 1 South of Bandra 216 367,764 1 367,764 24,000 400 50% Region 2 Andheri to Bandra 430 516,329 1 516,329 16,750 279 50% Region 3 Dahisar to Andheri 944 991,445 2 495,722 11,550 193 50% Region 4 Sion to Mulund 724 724,405 2 362,203 11,900 198 50% Region 5 Godbunder Road/Thane 772 694,848 2 347,424 8,550 143 40% Region 6 Vashi and East 679 644,615 2 322,308 6,100 102 30% Region 9 Dahisar to Vasai 783 626,259 2 313,130 5,200 87 50% Region 7 Panvel & Beyond 1,821 1,639,195 3 546,398 4,650 78 30% Region 10 Vasai to Virar 1,186 889,753 2 444,876 4,450 74 30% Region 8 Kalyan/Karjat/Bhiwandi 2,194 1,865,222 3 621,741 3,325 55 30% Total/Average 9,751 8,959,834 20 447,992 FDI Compliant 9,751 8,959,834 20 447,992

• ~20 FDI-compliant projects
• Average investment ticket: INR 1 bil (USD 17 mil)
• Average project size: 400 K sqft

Mumbai can absorb large capital in STAR-like projects because of high land prices

Increasing Land Cost

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Mid Income in Bangalore: Regions

Region Key Micro-markets Region 1 Central Bangalore Region 2 Old Bangalore Region 3 West Bangalore Region 4 East Bangalore Region 5 North Bangalore Region 6 South Bangalore

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Region Micro-markets Selling Rate (INR/Sqft) Average Unit Size Average Price of Unit Absorption (2011 to YTD 2014) Min Max Average Sqft INR mil USD ‘000

• No. of Units

Region 1 Central Bangalore 7,350 8,100 7,725 1,650 12.7 212 407 Region 2 Old Bangalore 4,700 8,100 6,400 1,500 9.6 160 630 Region 3 West Bangalore 2,850 4,500 3,675 1,450 5.3 88 827 Region 4 East Bangalore 3,750 4,200 3,975 1,400 5.6 93 11,694 Region 5 North Bangalore 3,550 4,150 3,850 1,400 5.4 90 15,113 Region 6 South Bangalore 3,550 3,950 3,750 1,300 4.9 82 28,524

Mid Income in Bangalore: Definition

Source: Prop Equity, ArthVeda 1 USD = 60 INR

High absorption in Region 4, 5 and 6 Low absorption in Region 1 and 2 because of few new launches

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Mid Income in Bangalore: Opportunities & Constraints

Limited land availability for new projects in Region 1, 2 and 3

• ~11 FDI-compliant projects
• Average Investment Ticket Size in FDI compliant

projects: ~INR 350 mil (USD 5.8 mil)

• Average project size: 675 K sqft

*Investment potential is calculated by targeting 10% of the Mid Income units absorbed during 2011-YTD 2014 Source: Prop Equity, ArthVeda 1 USD = 60 INR

Regions Micro-Markets Investment Potential* Average Selling Rate Land & Approval Cost

• No. of Units Total Project

Size (sqft)

• No. of

Projects Project Size per project (sqft) INR/Sqft USD/Sqft As % of Sales Region 1 Central Bangalore 41 67,163 1.0 67,163 7,725 129 25% Region 2 Old Bangalore 63 94,488 1.0 94,488 6,400 107 25% Region 3 West Bangalore 83 119,968 1.0 119,968 3,675 61 20% Region 4 East Bangalore 1,169 1,637,111 2.5 654,845 3,975 66 20% Region 5 North Bangalore 1,511 2,115,836 3.5 604,525 3,850 64 20% Region 6 South Bangalore 2,852 3,708,072 5.0 741,614 3,750 63 20% Total/Average 5,719 7,742,640 14 553,046 FDI Compliant 5,533 7,461,020 11.0 678,275

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Mid Income in Rest of India: Target Cities

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Mid Income in Rest of India: Definition

Source: Prop Equity, ArthVeda

Tier 1 cities have higher absorption Absorption in Tier 2 cities is more secular in nature

City Selling Rate (INR/Sqft) Average Unit Size Average Price of Unit Absorption (2011 to YTD 2014) Min Max Average Sqft INR mil USD ‘000

• No. of Units

Gurgaon 5,700 7,700 6,700 1,400 9.4 157 40,728 Chennai 3,600 4,300 3,950 1,100 4.3 72 42,027 Pune 3,700 4,550 4,125 900 3.7 62 76,492 Ahmedabad 2,150 2,700 2,425 1,100 2.7 45 50,192 Kolkata 2,700 3,400 3,050 1,100 3.4 57 25,673 Jaipur 2,625 2,860 2,743 1,300 3.6 60 9,747 Bhopal 1,900 2,400 2,150 1,200 2.6 43 13,938 Vijaywada/Rajamundri/Guntur 3,200 5,500 4,350 1,200 5.2 87 NA Vishakhapatnam 2,250 3,000 2,625 1,350 3.5 58 3,411 Coimbatore 3,500 4,000 3,750 1,400 5.3 88 5,083 Hyderabad 2,700 3,400 3,050 1,400 4.3 72 27,317 Lucknow 2,700 3,200 2,950 1,400 4.1 68 7,614 Raipur 2,100 3,000 2,550 1,100 2.8 47 4,931 Vadodara 2,100 2,450 2,275 1,200 2.7 45 19,147

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Mid Income in Rest of India: Opportunities & Constraints

Low land values in Tier 1 and Tier 2 cities increase the FDI compliant (USD 5 mil investment) project size beyond 900,000 sqft making the proposition risky

• ~48 FDI-compliant projects
• Average Investment Ticket Size: ~INR 490 mil (USD 8.2 mil)
• Ex Gurgaon: INR 360 mil (USD 6.0 mil)
• Average project size: 675 K sqft
• Ex Gurgaon: 700 K sqft

Investments in Rest of India require a huge deal pipeline and a large fund management team

*Investment potential is calculated by targeting 10% of the Mid Income units absorbed during 2011-YTD 2014 Source: Prop Equity, ArthVeda 1 USD = 60 INR

City Investment Potential* Average Selling Rate Land & Approval Cost

• No. of Units Total Project

Size (sqft)

• No. of

Projects Project Size per project (sqft) INR/Sqft USD/Sqft As % of Sales Gurgaon 4,073 5,701,972 10.0 570,197 6,700 112 30% Chennai 4,203 4,622,927 8.0 577,866 3,950 66 25% Pune 7,649 6,884,284 12.0 573,690 4,125 69 25% Ahmedabad 5,019 5,521,081 5.5 1,003,833 2,425 40 20% Kolkata 2,567 2,823,984 3.5 806,853 3,050 51 20% Jaipur 975 1,267,139 1.5 844,759 2,743 46 20% Bhopal 1,394 1,672,597 2.0 836,299 2,150 36 20% Vijaywada/Rajamundri/Guntur NA NA NA NA 4,350 73 20% Vishakhapatnam 341 460,533 1.0 460,533 2,625 44 20% Coimbatore 508 711,551 1.0 711,551 3,750 63 20% Hyderabad 2,732 3,824,416 5.0 764,883 3,050 51 20% Lucknow 761 1,065,917 1.3 819,936 2,950 49 20% Raipur 493 542,367 1.0 542,367 2,550 43 20% Vadodara 1,915 2,297,640 3.0 765,880 2,275 38 20% Total/Average 32,630 37,396,408 55 682,416 FDI Compliant 28,487 32,423,271 48 678,311

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Pan India Mid-Income: Investment Potential*

Source: Prop Equity, ArthVeda *Investment potential is calculated by targeting 10% of the Mid Income units absorbed during 2011-YTD 2014. The table above includes only the projects which are FDI compliant and are also compliant with STAR’s investment strategy.

• No. of Units

Total Project Size (sqft)

• No. of Projects

Average Project Size (sqft) Greater Mumbai South of Bandra 216 367,764 1 367,764 Andheri to Bandra 430 516,329 1 516,329 Dahisar to Andheri 944 991,445 2 495,722 Sion to Mulund 724 724,405 2 362,203 Godbunder Road/Thane 772 694,848 2 347,424 Vashi and East 679 644,615 2 322,308 Dahisar to Vasai 783 626,259 2 313,130 Panvel & Beyond 1,821 1,639,195 3 546,398 Vasai to Virar 1,186 889,753 2 444,876 Kalyan/Karjat/Bhiwandi 2,194 1,865,222 3 621,741 Total Mumbai 9,751 8,959,834 20 447,992 Bangalore Region 4 935 1,309,689 2 654,845 Region 5 1,295 1,813,574 3 604,525 Region 6 2,852 3,708,072 5 741,614 Total Bangalore 5,083 6,831,335 10 683,134 Rest of India Gurgaon 4,073 5,701,972 10 570,197 Chennai 4,203 4,622,927 8 577,866 Pune 7,649 6,884,284 12 573,690 Ahmedabad 4,563 5,019,164 5 1,003,833 Kolkata 2,201 2,420,558 3 806,853 Jaipur 650 844,759 1 844,759 Coimbatore 508 711,551 1 711,551 Hyderabad 2,732 3,824,416 5 764,883 Lucknow 586 819,936 1 819,936 Total Rest of India 27,164 3,08,49,568 46 670,643

TOTAL 41,998 46,640,737 76 613,694

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Appendices

Opportunities & Constraints in Mid Income Housing STAR Fund I: Project Highlights DREAM Fund: Investment Summary DHFL presence in target locations Tax Efficiency of Pooling Locations

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DHFL presence in target locations

Total Loans Outstanding*

• No. of DHFL Offices
• No. of Employees

in INR bil in USD mil Mumbai 43 258 81.9 1,365 Bangalore 13 18 9.3 155 Gurgaon 12 28 5.7 95 Chennai 8 30 5.9 98 Pune 9 34 6.2 103 Ahmedabad 6 28 3.5 58 Jaipur 5 30 3.5 59 Coimbatore 3 7 1.1 18 Hyderabad 8 27 8.3 138 Lucknow 4 11 1.3 21

*Data as of July 2014 1 USD = 60 INR

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Appendices

Opportunities & Constraints in Mid Income Housing STAR Fund I: Project Highlights DREAM Fund: Investment Summary DHFL presence in target locations Tax Efficiency of Pooling Locations

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Star fund I: Project Aloha, Bangalore

Total Saleable Area 302,700 Sqft Target Gross IRR* 41% (now converted to fixed return) Structure OFCD with majority control in SPV No of residential units 198 Expected Exit Date December 2016 Fund’s Investment INR 105 mil (USD 1.75 mil) Per unit price / 2 BHK INR 6.0 mil

*Target Gross IRR is in INR before fees and taxes. 1 USD = 60 INR

Current Status:

• 30% of units sold
• TDR Acquisition done.
• Full height permission received
• Foundation completed (75%)
• Basement 1 roof slab formwork: 40% completed

Location Jalahalli, Bengaluru Developer Cubatic Shimul

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Star fund I: Project Innova, Chennai

Total saleable area 230,640 Sft Target gross IRR* 35% Structure OFCD with pledge of shares No of residential units 234 Expected exit date April 2015 Fund’s investment INR 100 mil (USD 1.7 mil) Per unit price / 2 BHK INR 4.5 mil

*Target Gross IRR is in INR before fees and taxes. 1 USD = 60 INR

Location

Kattupakam, Chennai

Developer

PDotG Current Status:

• Approvals received, construction underway, structure completed for 3

buildings and brickwork in progress for 3 buildings;

• 85% of units sold out of total 234;
• Exit started; Rs.2.74 Cr received and final exit expected by April, 2015.

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Star fund I: Project Surajya, Pune

Total saleable area 500,000 Sq ft Target gross IRR* 39% (Revenue Sharing) Structure OFCD with majority control in SPV No of residential units 500 Expected exit date September 2017 Fund’s investment INR 175 mil (USD 2.92 mil) Per unit price / 2 BHK INR 4.0 mil

*Target Gross IRR is in INR before fees and taxes. 1 USD = 60 INR

Location Bhukum, Pune Developer Pate Developers Current Status:

• Total investible amount is disbursed;
• Land is registered in the name of the SPV;
• Fire NOC and building permissions received;
• Proposed no. of units 500 approximately

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Star fund I: Project Laxmi Niwas, Guntur

Total saleable area 75,882 Sqft Target gross IRR* 35% Structure OFCD with majority control in SPV No of residential units 55 Expected exit date Dec 2015 Fund’s investment INR 50 mil (USD 0.8 mil) Per unit price / 2 BHK INR 4.4 mil

*Target Gross IRR is in INR before fees and taxes. 1 USD = 60 INR

Location Syamalanagar, Guntur Developer Madhu Infrastructure Pvt Ltd Current Status:

• Approvals received; Construction in progress
• 40% of units sold out of total 55 units;
• 5th floor slab completed
• Brickwork started for 1st & 2nd floor

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Star fund I: Project Blue Monarch, Lucknow

Total saleable area 163,000 Sqft Target gross IRR* 36% (profit sharing) Structure OFCD with majority control in SPV No of residential units 108 Expected exit date March 2016 Fund’s investment INR 77 mil (USD 1.28 mil) Per unit price / 2 BHK INR 5.0 mil

*Target Gross IRR is in INR before fees and taxes. 1 USD = 60 INR

Location Shaheed Path, Lucknow Developer SKC Builders Current Status:

• Approvals received, construction underway;
• As of now construction work for 5th slab is in progress & concreting in

progress for plinth level slab for Block B is in progress

• 40% of units sold.
• We expect to exit the project by March 2016 with our expected returns

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Star fund I: Project Pranav Aarupadai, Chennai

Total saleable area 25,794 Sqft Target gross IRR* 35% Structure OFCD with majority control in SPV No of residential units 36 Expected exit date March 2015 Fund’s investment INR 43.5 mil (USD 0.725 mil) Per unit price / 2 BHK INR 3.5 mil

*Target Gross IRR is in INR before fees and taxes. 1 USD = 60 INR

Location VGP Santosh Nagar, Chennai Developer Pranav Foundations Current Status:

• Approvals received, construction in final stage; finishing in progress;
• 69% of units sold (Total 36 units);
• Exit started; Rs.5.2 Cr received and final exit expected by March 31, 2015.

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Star fund I: Project Park Ville, Hyderabad

Total saleable area 153,280 Sqft Realized Gross IRR* 33% Structure OFCD with majority control in SPV No of residential units 126 Exit date January 2015 Fund’s investment INR 100 mil (USD 1.7 mil) Per unit price / 2 BHK NA

*Realized Gross IRR is in INR before fees and taxes. 1 USD = 60 INR

Location Tellapur, Hyderabad Developer Madhu Infra Current Status:

• Exited with 33% IRR as on 31st January 2015

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Star fund I: Project Tarangan, Nagpur

Total saleable area

300,000 Sqft

Target gross IRR*

35%

Structure

OFCD with pledge of shares and majority holding

No of residential units

375

Expected exit date

December 2015

Fund’s investment

INR 150 mil (USD 2.5 mil)

Per unit price / 2 BHK

INR 4.5 mil

*Target Gross IRR is in INR before fees and taxes. 1 USD = 60 INR

Location

Wardha Road, Nagpur

Developer

Tarangan

Current Status:

• Approvals still awaited
• The Land valuation has been reviewed and current valuation is

approximately INR 340 - 360 mil (USD 5.7 – 6.0 mil)

• Till date, we have recovered INR 15.2 mil from the project

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Star fund I: Project Dreamz, Chennai

Total saleable area 88,024 Sqft Target gross IRR* 35% Structure OFCD with pledge of shares No of residential units 144 Expected exit date December 2015 Fund’s investment INR 50 mil (USD 0.83 mil) Per unit price / 2 BHK INR 1.5 mil

*Target Gross IRR is in INR before fees and taxes. 1 USD = 60 INR

Location

Thiruvallur, Chennai

Developer

PdotG Current Status:

• Approvals received, construction underway;
• 69% of units sold out of total 144 units;
• We expect to exit the project with our anticipated returns by December 31,

2015

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Star fund I: Lakshmi Towers, Guntur

Total saleable area 181,365 Sqft Target gross IRR* 35% Structure OFCD with majority control in SPV No of residential units 130 Expected exit date June 2017 Fund’s investment INR 150 mil (USD 2.5 mil) Per unit price / 2 BHK INR 4.6 mil

*Target Gross IRR is in INR before fees and taxes. 1 USD = 60 INR

Location Syamalanagar, Guntur Developer Park Ville Projects Private Limited Current Status:

• Building permissions received;
• Launch plans under finalization, expected to be launched by 31st July, 2015

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Star fund I: Dronagiri, Mumbai Outskirts

Total saleable area 92,000 Sqft Target gross IRR* 35% Structure OFCD with majority control in SPV No of residential units 95 Expected exit date June 2017 Fund’s investment INR 90 mil (USD 1.5 mil) Per unit price / 2 BHK INR 7.5 mil

*Target Gross IRR is in INR before fees and taxes. 1 USD = 60 INR

Location Dronagiri, Navi Mumbai Developer Yushan Realty Private Limited Current Status:

• Plan for submission under process
• Plans under preparation, expected to be submitted by this month and

expected sanction by 15th May, 2015

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Appendices

Opportunities & Constraints in Mid Income Housing STAR Fund I: Project Highlights DREAM Fund: Investment Summary DHFL presence in target locations Tax Efficiency of Pooling Locations

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DREAM Fund: Investment Summary

1 USD = 60 INR *IRRs shown are in INR

Developer / Project Name Location Type Amount Invested Status Actual IRR on Exit* INR mil USD mil JST Silicon Towers Hyderabad Commercial 252.50 4.21 Realized 45.4% Blue Star Cochin Residential 250.00 4.17 Realized 20.1% Riverdale Unwind Pune Residential 30.00 0.50 Realized 27.0% Palmgrove I Bengaluru Residential 50.00 0.83 Realized 29.0% Springdale Chennai Residential 25.00 0.42 Realized 30.0% G K’s Habitat Royale Secunderabad Residential 55.00 0.92 Realized 26.0% Flora Chennai Residential 45.00 0.75 Realized 30.0% Malhar Bengaluru Residential 160.00 2.67 Realized 30.0% Golden Beach Hotels Mumbai Residential 150.00 2.50 Realized 15.0% G K’s Pride Secunderabad Residential 135.00 2.25 Realized 7.00% Marutham Chennai Residential 35.00 0.58 Realized 8.00% Wagholi East Ridge Pune Residential 250.00 4.17 Realized 9.8% Skylark Realty Bengaluru Residential 153.00 2.55 Realized 18.50%

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Appendices

Opportunities & Constraints in Mid Income Housing STAR Fund I: Project Highlights DREAM Fund: Investment Summary DHFL presence in target locations Tax Efficiency of Pooling Locations

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Tax considerations and Pooling Jurisdictions

Questions Mauritius Cayman Islands Singapore Luxembourg UAE

Treatment of capital gains A tax resident of Mauritius is exempt from capital gains tax arising on the sale of shares of an Indian company under the tax treaty Capital gains tax rate in Mauritius: 0% India does not have a tax treaty with the Cayman Islands Taxation in Cayman Islands: No fund level tax imposed in the Cayman Islands A tax resident of Singapore is exempt from capital gains tax arising on the sale of shares of an Indian company under the India-Singapore tax treaty subject to a holding period of 2 years and annual expenses of SGD 200,000 during the holding period Capital gains tax rate in Singapore: 0% (or 17% if the gains are treated as trading income) The tax treaty between India and Luxembourg does not exempt a Luxembourg resident entity from capital gains tax from the sale of shares of Indian companies Therefore, a Luxembourg resident will be taxed in India for capital gains arising from sale of shares of Indian companies as per applicable rates The tax treaty between India and UAE does not exempt a UAE resident entity from capital gains tax from the sale of shares of Indian companies Therefore, a UAE resident will be taxed in India for capital gains arising from sale of shares

• f Indian

companies as per applicable rates Dividends 0%. (However, portfolio companies in India will be subject to a dividend distribution tax at 20.47%)

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Tax considerations and Pooling Jurisdictions

Questions Mauritius Cayman Islands Singapore Luxembourg UAE

Interest There is no relief under the India- Mauritius tax treaty in respect of the withholding tax rate

• n interest payments

Since there is no treaty between India and Cayman Islands, there is no relief in respect of the withholding tax rate on interest payments made by an Indian company to a Cayman Islands resident 15% (as per the provisions of the India-Singapore tax treaty) 10% (as per the provisions of the India-Luxembourg tax treaty) 12.5% (as per the provisions of the India – UAE tax treaty) Corporate Income Tax Rates 3% / 0% (depending

• f extent of foreign

tax credits) 0% 0% (if eligible under tax exemption schemes) / 17% Luxembourg investment funds are generally not subject to Luxembourg income taxes 0% General Comments Mauritius has emerged as favorite destination for

• ffshore funds

investing into India The tax treaty between India and Mauritius has been stable and is expected to remain stable in the future Well-developed financial center and reputed administration center Preferred jurisdiction for pooling capital from US tax residents Preferred holding company jurisdiction for investments in Asian-Pacific region Underdeveloped jurisdiction from a fund administration perspective Complex regulatory and tax framework leave scope for uncertainty Reputed and established jurisdiction for pooling capital from European investors Restricted and under-developed corporate law system Underdeveloped jurisdiction from a fund administration perspective

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Disclaimer

• This presentation is not an offering document for any securities or units of any kind and should not be seen as solicitation for
• investments. The presentation is intended for illustration and information purposes for intended user only. Further, the

contents of this presentation are provisional and may be subject to change.

• This presentation is produced solely to the specified recipient for the purpose of its internal use. This presentation may not be

transmitted, reproduced or made available to any other person. The information contained herein is proprietary and confidential and may not be disclosed to third parties or duplicated or used for any purpose other than the purpose for which it has been provided. Any unauthorized use, duplication or disclosure of this presentation is prohibited by law.

• Certain information included in this presentation is based on information obtained from sources considered to be reliable,

however, the accuracy of such information cannot be guaranteed and further such information may be incomplete or

• condensed. No liability is assumed for the relevance, accuracy, or completeness of the contents of this presentation.
• This presentation is subject to the more detailed information specified in the disclosure documents and client service
• agreement. Investors must read and agree to the contents of the documents, including all risks highlighted therein, prior to

making any investment related decisions. Before making an investment, each potential investor should make its independent assessment and inquiries.

• Document may include predictions, estimates or other information that might be considered forward-looking While these

forward-looking statements represent our current judgment on what the future holds, they are subject to risks and uncertainties that could cause actual results to differ materially. Investors are cautioned not to place undue reliance on these forward-looking statements.

• Investments in equity markets are subjected to market risk and there is no guarantee that the investment objective of the

strategy will be achieved. Please read the strategy related documents (Disclosure and Client Service Agreement) carefully. Investors should consult their tax and investment advisors before investing.

• Any statement with respect to laws/ positions of tax of other jurisdiction should be confirmed by the local counsels of the

respective jurisdictions.

Wealth from Wisdom

ArthVeda Fund Management Pvt. Ltd.

• Grd. Floor, HDIL Towers, Anant Kanekar Marg, Bandra (E),

Mumbai 400051, Maharashtra, India Contact no.: +91 22 67748558/500; Fax: +91 22 67748585 Email: info@arthveda.co.in www.arthveda.co.in

Invest in Middle Income Housing

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