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Founded in 2011 by Rajesh Krishnan, its CEO and managing director, Brick Eagle is not your regular builder. Krishnan, a former banker with stints at Lehman Brothers and Standard Chartered, looks at affordable housing differently. “Starting out as another builder wouldn’t have carried me far,” he confesses. Brick Eagle was set up as an incubator for builders. It offers builders capital from investors, and sets up an ecosystem of service providers for construction, advertising, and technology.

It works like this. Brick Eagle selects a willing local builder with a good track record, and typically provides 40% of the capital required, generally around Rs 4 crore. It also takes a stake in the builder and gets veto rights on its board. Brick Eagle also chooses the chief financial officer of the builder firm.

The developer gets a venture toolkit that includes an ERP system, help in project design, construction technology, and promotion. All this comes from companies that Brick Eagle has stakes in, like Hyderabad-based interior designer Foyr or Bengaluru-based IDEINLAB Architects. Funding, which is central to Brick Eagle’s model, is taken care of by Brick Eagle Capital Advisory, led by Kirti Timmanagoudar. So far, the division has raised Rs 400 crore for its projects. Separately, in September, it raised Rs 50 crore each from Bennett Property Holdings and Axis Bank for an alternative investment fund (AIF). The AIF aims to support development of around 50,000 housing units for low-income groups, while targeting 18%-20% annual returns.

It is a complex operation, but the banker in Krishnan is optimistic. In fact, some of his early investors were former colleagues at StanChart.

Brick Eagle today manages over 1,000 acres of land on which 42,500 homes are being built by six developers. The projects are based in nine cities across Maharashtra, Rajasthan, Gujarat, and Tamil Nadu. The units Brick Eagle builds are mostly under 35 sq.m. and priced under Rs 20 lakh. Krishnan aims to deliver 5,000 homes a year across projects.

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Also, the Brick Eagle model has too many moving parts, says Anil Sachidanand, managing director and CEO, Aspire Home Finance, the home finance division of Motilal Oswal. “The model relies heavily on getting monies from customers to move ahead with projects. This won’t run smooth all the time as it will be tough to run real estate like consumer goods, even if it is low-cost housing.” The new Real Estate (Regulation and Development) Act, which says developers can only sell ready-to-occupy flats, would also test the model.

Indeed, not all of Krishnan’s bets have worked out well. In 2012, when Krishnan was yet to master the concept of building an ecosystem, Brick Eagle committed an investment worth Rs 200 crore to Mumbai-based Xrbia, which was already involved in lowcost housing. The capital was 300 acres of land under Brick Eagle.

Though the status of this specific deal isn’t clear, Xrbia has since branched out and develops low-cost projects independently, some in locations close to Brick Eagle’s projects. Rahul Nahar, chairman of Xrbia, did not comment on the deal. Nahar, though, claims that Xrbia will soon touch a sales revenue of $1 billion (Rs 6,317 crore) from affordable housing. Fortune India could not verify the claims.

But for now, Krishnan and his investors remain optimistic. Indeed, the model of making use of local builders, creating an ecosystem for them to leverage, and hands-on supervision, is a marked difference from other private equity funds who largely only provide the capital. From an investor’s perspective, there is indeed more transparency and accountability.

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