TFCI Expands into Hospitality and Real Estate AIFs, Diversifying Its Investment Portfolio

Tourism Finance Corporation of India Limited (TFCI) has announced its plans to expand its presence in the alternative investment space by acting as a co-sponsor and anchor investor in two Category II Alternative Investment Funds (AIFs). This move is part of TFCI's broader strategy to diversify its investment portfolio and capitalize on new opportunities in the hospitality and real estate sectors.

In a regulatory filing, TFCI revealed that it will co-sponsor and anchor the Holystone Hospitality Fund, an equity-focused Category II AIF. The company will commit up to 5 percent of the total fund corpus. The registration of the fund has already been applied for with the Securities and Exchange Board of India (SEBI).

Additionally, TFCI will act as an anchor investor in the Certus Real Estate Fund, another Category II AIF. The company will invest up to 10 percent of the total fund size. The application for the Certus Real Estate Fund's registration has also been submitted to SEBI.

Commenting on the development, Anoop Bali, Managing Director of TFCI, stated that this move aligns with the company's long-term diversification strategy. 'Our participation as co-sponsor and anchor investor reflects TFCI's intent to leverage our sectoral expertise while partnering with experienced fund managers. The AIF route allows us to support the hospitality and real estate sectors in a capital-efficient manner, while creating additional avenues for value creation,' Bali said.

Market participants see this initiative as a significant step in TFCI's transition from a niche tourism-focused lender to a diversified non-banking financial company (NBFC) with a broader financing and investment mandate. The AIF structure is expected to provide TFCI with access to equity and quasi-equity opportunities without significantly increasing balance sheet risk.

TFCI, a specialized NBFC-ML, provides financial assistance across various sectors, including tourism and hospitality infrastructure, manufacturing, renewable energy, social and urban infrastructure, real estate, NBFC and housing finance company (HFC) funding, structured credit, and lending against listed securities. The company has also been expanding its digital retail lending platform.

This strategic move into AIFs is likely to enhance TFCI's market position and strengthen its financial resilience. By diversifying its investment portfolio, TFCI aims to capitalize on growing opportunities in the hospitality and real estate sectors, which are expected to see significant growth in the coming years.

Overall, TFCI's decision to co-sponsor and anchor these AIFs reflects a well-thought-out strategy to adapt to the evolving financial landscape and create sustainable value for its stakeholders.