Bangalore: India Infoline Ltd’s (IIFL) non-banking financial company, India Infoline Finance Ltd, and some of its wealthy clients have together invested 150 crore in a 500-acre Navi Mumbai township project of property developer Wadhwa Group.

IIFL has bought non-convertible debentures (NCD) sold by Wadhwa Group for the project, three years after the developer signed an agreement with Gulf Finance House for developing the land owned by the Bahrain-based investment bank.

NCDs have become popular among real estate developers since 2009, since banks tightened lending to developers.

Srinivasan Gopalan, chief financial officer and chief operating officer, Wadhwa Group, said the company has completed acquiring land for the project and will now begin work on infrastructure such as roads and sewage.

“We have land permissions in place and the project is a year away from launch," he said.

After developing the entire project, Wadhwa Group will give 1.2 million square feet of built-up or developed area to Gulf Finance House in about eight years. This is in addition to an upfront payment already made to the Bahrain bank.

Wadhwa, known for its string of premium office projects in Mumbai’s Bandra-Kurla Complex business district, last year raised 110 crore of debt from JM Financial Products Ltd to fund a luxury project in central Mumbai.

India Infoline’s first real estate fund also invested around 350 crore in Wadhwa’s high-end residential project in Chembur, in suburban Mumbai, last year.

“The investment (in the Navi Mumbai township project) is in line with our focus on the affordable residential segment," said Balaji Raghavan, chief executive of the real estate fund.

Township projects in India have had a mixed run so far, with some of them taking off well and many running time and money trouble, particularly after the 2008 economic slowdown.

While many large developers today stay away from such long-gestation, capital-intensive projects, some large projects are still underway.

Earlier this year, Mumbai’s Lodha Group announced an 800-acre township with an investment of close to 14,000 crore as part of its plan to develop the “Palava" project on 4,000 acres of land between Navi Mumbai and Dombivali.

IIFL’s Raghavan said the structure of the Navi Mumbai project deal takes care of the time that will be taken to generate revenues at the time of launch.

Wadhwa Group’s Gopalan said the company plans to raise more capital for the project, but not through debt.

“We will look for active developer partners in the project, though we will have architectural control of the development," he said.

Ambar Maheshwari, managing director of corporate finance at property advisory Jones Lang La Salle, said the township development story still makes sense in terms of the cash flows these projects can generate.

Last time around, the timing of the projects went wrong and so developers need to give realistic timelines for completion, he said.

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