Piramal Fund Management invests Rs 2,320 crore in Lodha Group projects

This is the second investment by Piramal Fund Management in the Lodha Group after an earlier investment of Rs 425 crore in Lodha Venezia, an advanced stage project in Mumbai

Kailash Babar Saikat Das
  • Updated On Sep 1, 2016 at 08:29 PM IST
MUMBAI: Realty developer Lodha Group has raised debt of Rs 2,320 crore from Piramal Fund Management, the realty investment arm of Piramal Enterprises, for a portfolio of projects in south and central Mumbai including The World Towers. This is the single largest debt transaction to take place in the real estate funding space, both the entities said in a joint press release.

The money invested across multiple projects will be utilized to refinance existing debts and support completion of on going projects. Lodha has borrowed funds at about 15-16% interest, a move that will help the builder reduce its finance costs.

This is the second investment by Piramal Fund Management in the Lodha Group after an earlier investment of Rs 425 crore in Lodha Venezia, an advanced stage project in Mumbai.

“This transaction demonstrates our fund’s ability and willingness to scale our financing relationships with our choice of partners. The use of proceeds will ensure completion of what we believe to be marquee projects of the investee company in Central and South Mumbai,” said Khushru Jijina, Managing Director, Piramal Fund Management.

ET was first to report the transaction on July 15.

The invested projects are at various stages of completion and a fair proportion of flats have been sold giving the company locked-in receivables.

The deal has been structured as a fixed return debt investment with periodic coupon payments and has an appropriate security mechanism in place, including hard asset cover as well as an escrow of receivables, the release added.

“We are seeing momentum building up in our business with sales, deliveries and collections all moving up. This transaction will further strengthen our balance sheet and give us room to further improve our growth. We are pleased to have deepened our relationship with PFM and look forward to a long-term engagement with them,” said Abhishek Lodha, Managing Director, Lodha Group.

Piramal Fund Management division, provides comprehensive financing solutions to real estate companies. The Company also has strategic alliances with top global pension funds like CPPIB Credit Investment Inc. and APG Asset Management. The total funds under management is around $3.3 billion (about Rs 22,100 crore) for the company.

For FY 2015-16, Lodha Group has recorded sales of over Rs 8,000 crores. However, the developer’s ratings had also taken a hit in the last few months.

In May, ratings agency Moody's Investors Service had downgraded the corporate family rating of Lodha Developers Private Ltd (LDPL) to B1 from Ba3. Moody's had also downgraded the senior unsecured debt rating of the US dollar denominated $200 million bonds issued by Lodha Developers International Ltd and guaranteed by LDPL to B1 from Ba3. The outlook on the ratings is negative, Moody's had said in a release then.
  • Published On Sep 1, 2016 at 07:31 PM IST
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