In one of the biggest debt deals in real estate in recent years, Piramal Fund Management has lent Rs 2,320 crore to the Mumbai-based Lodha Group.
Lodha, the country’s biggest property developer in terms of sales, recently got a Rs 425-crore investment from Piramal for its Lodha Venezia project in Mumbai. Piramal Fund, part of the Ajay Piramal entity, has committed the latest money across Lodha’s multiple projects, to replace existing debt. “This funding will enable Lodha to complete and deliver marquee projects in south and central Mumbai. 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,” Piramal Fund Management said.
Piramal has turned to be an aggressive investor in real estate, with disbursal of Rs 1,500 crore every month. It has a commitment of Rs 32,000 crore, debt and equity, to developers. Piramal recently gave credit lines worth Rs 15,000 crore to developers in Mumbai, Bengaluru and other cities, where developers could avail Rs 1,000 crore from each facility of the former for a stated purpose.
“The coupon rate (for Lodha) is in the mid-teens and repayment will be three to five years. We have invested from our proprietary book and have first charge on the assets,” said Khushru Jijina, managing director, Piramal Fund Management.
Lodha made operating sales of Rs 6,430 crore in FY16, according to Moody’s Investors Service. In May, the latter had downgraded the corporate family rating of Lodha Developers, citing less than expected performance.
Abhishek Lodha, managing director, Lodha Group, said: “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.”