Piramal invests Rs750 crore in Adarsh Developers

Real estate investor Piramal Fund Management Pvt. Ltd has invested Rs750 crore in Bengaluru-based Adarsh Developers in a large debt refinancing and construction financing transaction.

Of this, Rs550 crore will go to refinance existing loans and the rest will be used for working capital requirements in the company’s multiple projects. The financing facility, in the form of structured debt and construction finance, is against seven projects, out of which four are nearing completion, two are under construction and one is upcoming.

With this, Piramal has invested nearly Rs1,200 crore in Adarsh Developers—Rs207 crore at the end of 2014, Rs250 crore in 2015 and Rs750 crore now.

Mumbai-based Piramal, one of the largest lenders and investors in residential real estate, has been investing steadily in southern India in the past few years, with its investments crossing Rs10,000 crore.

“South India, particularly Bengaluru, gives me the opportunity to look at various price points and tap into a large commercial office market. While Chennai continues to do well, Hyderabad is a market we will step up investments in,” said Khushru Jijina, managing director, Piramal Fund Management, the investment arm of the Piramal Group.

Adarsh Developers chairman and managing director B.M. Jayeshanker said that the three transactions with Piramal have helped the company to step up construction of the projects as well as replace loans.

Piramal is currently in talks with various large and medium-sized developers in Bengaluru, Chennai and Hyderabad to invest across its capital stack—equity, structured debt and construction finance—including its recently launched office lease rental discounting scheme to invest in office and retail projects, and customized funding for plotted land developments.

Despite the slowdown in sales, Piramal continues to be an active investor in Bengaluru. On 25 November, Mint reported that Piramal had sanctioned Rs360 crore for realty firm Ozone Group’s 150-acre mixed-use Urbana township project in north Bengaluru, which will help the developer refinance existing loans.

Over the past few years, private equity investors have looked at Bengaluru as a priority destination, particularly at a time when India’s largest property market, the National Capital Region, centred around Delhi, has fared badly.

“Bengaluru is attractive both for its residential and office project investment opportunities, and good projects there attract most investors. The good thing also is that developers in the city are still not as stretched as those in the larger markets, making it a relatively secure investment destination,” said Shobhit Agarwal, who is managing director of capital markets and international director at property consultant JLL India.