BackTotal Environment raises Rs255 crore via NCD issues
The firm has raised more than Rs500 crore this year, including Rs70 crore from Premji Invest
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Bengaluru: Total Environment Building Systems Pvt. Ltd, a Bengaluru-based developer of luxury homes, has raised ₹ 255 crore through a non-convertible debenture (NCD) issue from non-banking financial company (NBFC) Indostar Capital Finance Ltd.
“We have used the money to make payments for a couple of land parcels and to give Kotak (Realty Fund) an exit in the JP Nagar project," said Kamal Sagar, chairman and managing director, Total Environment.
Kotak Realty Fund, the real estate-focused private equity arm of Kotak Mahindra Group, had invested around ₹ 100 crore in 2010 in the high-end residential project in south Bengaluru. The investment was done from Kotak Alternate Opportunities Fund.
As an NBFC, Indostar Capital offers secured corporate lending, special situations lending and loans against property. It offers funding for both residential and commercial projects.
Indostar Capital declined to comment in response to an email query.
With this fund-raising, Total Environment has raised more than ₹ 500 crore this year, including ₹ 70 crore from Premji Invest, the private investment venture of billionaire Azim Premji, in a residential bulk-buying deal in one of its projects earlier this year.
In October, it also received an investment of ₹ 200 crore from Peninsula Brookfield Investment Managers Pvt. Ltd. The company has used the money for construction and to give another project-level investor, HDFC Asset Management Co. Ltd, an exit.
“Real estate is a capital intensive business and raising capital is a continuous process because we are constantly investing in different things," said Sagar.
Total Environment has raised the debt from Indostar Capital at an interest rate of 17%. This is lower than what NBFCs typically charge, which is 18-20% or sometimes even higher.
NBFCs still remain a fairly active lot of investors in the real estate industry and are competing with a number of private equity (PE) funds who have been doing more debt or debt-equity structured transactions, as they chase developers who are in need for capital.
“Today, NBFCs are willing to lend at slightly discounted rates, particularly when the developer in question is reputed and is known to service loans regularly with delays," said Ravi Ahuja, executive director, Cushman and Wakefield India, a property advisory.
Developers, on the other hand, are using this capital for a variety of reasons that includes buying land, servicing other loans and for project development, Ahuja added.
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