To reduce exposure of proprietary capital and diversify risk in a highly competitive real estate market, Grupo Aurora turned to Epsilon Group for ways to finance the growth of their investment pipeline.
Grupo Aurora is a local real estate developer focused on middle and high income level residential housing. For the past ten years, they have built over
20 apartment buildings and succesfully delivered over 500 housing units, generating more than USD 75 million in revenues. They manage, build and promote
all of their projects. Through Kusi Contratistas, a construction company owned by Grupo Aurora, they take care of all the construction needs.
Before reaching out to Epsilon Group about two years ago, the company financed all their projects mainly through proprietary capital and retail investors that pitched in cash on a case by case basis. All their projects are mostly equity funded and usually they do not like to finance them with any commercial debt just to be on the safe side in case the economy has a dowturn like it happened a couple of years ago. After years of growing this way and a few long meetings with us in which we showed them that they would be better off working with institutional capital from local and regional real estate venture funds instead of having to reach out to retail investors and/or debt, they decided to secure institutional capital for their project pipeline through us. So far, with the same real estate fund, we have closed two private placements that add up to almost S/. 8.5 million. The last one was secured in mid November for a beautiful upscale ten-floor apartment building with side views to the ocean. Epsilon Group assisted Grupo Aurora in the whole process of raising and securing the capital, in the legal paperwork, feasibility studies and it is also contributing on a month-to-month basis with the reporting of the financils of the both projects to the compliance committee of the real estate fund.
Grupo Aurora has improved their internal processes and overall become a more disciplined developer thanks to working with a partner that controls and audits the cash flows of their projects. They are aware that one of the best ways to reduce their risk of exposure of proprietarty capital in the market and grow fast and safe at the same time is by working with a financial partner that is also an expert in real estate development such as a real estate institutional fund. Finally, Grupo Aurora is focused on remaining on the front foot and further growing their pipeline through equity financing with local or regional real estate funds and is also currently working with Epsilon Group to structure its own tailored fund.
The Peruvian economy has made significant progress in its economic performance in recent years, with dynamic rates of GDP growth and low inflation and debt.
The real estate market (residential and commercial) has not been absent from the tremendous benefits generated by Peru´s sustained economic growth.