In a large, single project investment, real estate company Ozone Group has raised Rs.575 crore from Piramal Fund Management Pvt. Ltd for its 150-acre township in Bengaluru.
The money has been given through a structured transaction, combining debt with an equity kicker, primarily to refinance the developer’s existing loans and provide working capital, Ozone executives said.
Of the total funding, Rs.400 crore will go towards refinancing Ozone’s bank loans and the remaining will be used as working capital.
The project, Ozone Urbana, in northern Bengaluru, is under construction and will have nearly 11 million sq. ft of saleable area, comprising residences, office space and a hotel as well as homes for the old.
The project will be developed in four phases, and the first phase with 1,000 apartments will be delivered later this year. The project is expected to be completed in 2021.
“In Ozone, we found a partner that was strongly focused on creating a customized financing structure that would allow it to fast-track the execution of the project,” said Khushru Jijina, managing director of Piramal Fund Management.
With this transaction, Urban Infrastructure Venture Capital Ltd-backed Ozone Group has raised Rs.900 crore in the last fiscal year. In March, it raised Rs.150 crore from Aditya Birla Real Estate Fund to refinance a loan for its Metrozone project in Chennai, where the fund bought residential stock in the project in a bulk-buying deal. Earlier, global private equity fund Blackstone Group Lp had invested Rs.175 crore in the residential portion of the 42-acre, mixed-use Metrozone project.
“This deal completely de-risks the construction of a huge development like Urbana,” said Srinivasan Gopalan, chief executive officer, Ozone Group. “We are now focusing our energies on speedy sale and execution of the project.”
Since Gopalan joined Ozone last August, he has brought on board a number of senior executives to give the company’s performance a big push. Apart from these two projects, the developer is also planning a pipeline of new launches, including a four-acre, city-centric residential project and another one in Chennai.
Piramal Fund Management, which is among the most active domestic private equity (PE) investors today, has been steadily increasing the size of its deals. In March, it announced that it had committed Rs.1,200 crore as debt to a luxury residential development of Omkar Realtors and Developers Pvt. Ltd in south Mumbai.
While commercial office space transactions have attracted big ticket investments, it is only in recent months that funds are signing large cheques for residential projects.
“The size of PE transactions is gradually increasing due to a huge amount of capital in the market, waiting to be deployed,” said Shashank Jain, partner-transaction services at PwC India, a consultancy firm.