Embassy Group secures Rs650 crore loan from Piramal Finance
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Bengaluru: Piramal Finance Ltd, a subsidiary of Piramal Enterprises Ltd, has given a loan of Rs650 crore to Bengaluru-based Embassy Group.
The transaction has been structured like this: Embassy will in turn lend the money to its project partner Manyata Promoters Pvt. Ltd and a shareholder in Embassy Manyata Tech Park, a prominent information technology (IT) special economic zone (SEZ) in Bengaluru.
Reddy Veeranna, chairman and managing director, Manyata Promoters, has 26% shareholding in the IT SEZ while the remaining is with Embassy Group and global investment firm Blackstone Group Lp.
“Currently, Manyata Promoters owes around Rs500 crore (loan plus added interest) to Blackstone and Embassy. This money from Piramal will help in repaying the existing dues and some of it will be used as growth capital,” said a person directly familiar with the transaction, who didn’t wish to be named.
Embassy had filed an application for approval from the Securities and Exchange Board of India (Sebi) in October 2016, for a real estate investment trust (Reit) listing. The proposed Reit portfolio, which includes Embassy Manyata Tech Park along with other office parks, is more than 25 million sq.ft in size and valued at Rs20,000 crore.
“We are pleased to have extended our relationship with the Embassy Group and look forward to a long and mutually beneficial association. I have always admired Jitu Virwani’s vision, track record and execution capabilities and we are happy to provide them with customized financial solutions as they scale up their presence across both residential and commercial,” said Khushru Jijina, managing director, Piramal Finance.
Reddy Veeranna, chairman and managing director, Manyata Promoters, couldn’t be reached immediately for comment.
In early 2016, Manyata Promoters raised Rs725 crore from financial services firms IIFL Group and Edelweiss Group in a joint debt transaction. Edelweiss, as the senior lender, loaned about Rs450 crore, while the remaining Rs275 crore was given by IIFL.
Manyata Promoters, along with realty firm Embassy Group and investor Blackstone Group Lp, used the money for its new plotted development projects and to also repay loans of existing investors IFCI Ltd and Blackstone Group.
With the latest transaction, Piramal has lent a total of Rs1,100 crore to Embassy Group and its partners across cities.
Earlier this year, Piramal Finance lent Rs450 crore to a joint venture between Embassy Group and Hyderabad’s Phoenix Group, which is developing three SEZs in Hyderabad, Mint reported in April. The money has been given in the form of construction finance to procure approvals and develop the SEZs, which will be built across 10 million sq. ft.
In the joint venture with Phoenix Embassy Tech Zone Pvt. Ltd, Embassy is an equity partner, while Phoenix provides the land. Both are involved in project construction.
Embassy Group is a prominent commercial office developer which has delivered around 30 million sq.ft of office space and 6 million sq.ft of premium residential developments. The firm has a pipeline of around 17 million sq.ft of commercial developments across Bengaluru, Hyderabad and Chennai.
“We are delighted to be working closely with a large diversified conglomerate like the Piramal Group who is known for their structuring capabilities and quick turnaround time. We look forward to leveraging their capabilities as we partner with them on our growth capital requirements going forward,” said Jitu Virwani, chairman and managing director, Embassy Group, in a statement.