Aditya Birla realty fund invests Rs150 crore in Ozone Group
The realty group will use the funds to refinance an earlier loan in its Metrozone project in Chennai
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Realty firm Ozone Group has raised Rs.150 crore from Aditya Birla Real Estate Fund to refinance an earlier loan in its Metrozone project in Chennai.
Aditya Birla Real Estate has bought residential stock in the project in a bulk-buying deal, said people familiar with the development.
For Bengaluru-based Ozone Group, backed by Urban Infrastructure Venture Capital Ltd, this is the second time it has raised capital through a bulk transaction of apartments in Metrozone. In 2014, global private equity fund Blackstone Group Lp had invested Rs.175 crore in the residential portion of the 42-acre, mixed-use Anna Nagar project.
The money has come in through an NCD (non-convertible debenture) structure and will be used to repay a loan of HDFC Ltd, said Ozone’s chief executive officer Srinivasan Gopalan.
“The group is moving towards debt reduction because that tends to eat into profits. But our aim is to improve operational efficiency and take (project) sales to a level that there is no need to take more debt,” said Gopalan, who joined Ozone last August.
Aditya Birla Real Estate Fund declined to comment on the transaction.
At a time when home sales are still slow, a number of private equity (PE) funds are looking to buy apartments at discounts to market prices. Indiareit Fund Advisors Pvt. Ltd launched an apartment fund in 2014 to buy residential apartments in bulk from developers and later in the year, former Indiareit head Ramesh Jogani partnered Centrum Capital Ltd to deploy Rs.250 crore in buying apartments in bulk.
Over the last couple of years, many real estate developers have raised capital from non-banking financial companies (NBFC) and PE funds to refinance previous loans, repay banks or pave the way for exits by investors as slow execution or approvals delay projects.
“Refinancing is quite common and is typically done to replace high-cost loans with low-cost ones. But now, some developers are also forced to borrow money at higher rates because they need to repay previous loans, as cashflows from project sales need not be that strong,” said Rajeev Bairathi, executive director-capital transactions group and north India at property advisory Knight Frank India
Since Gopalan joined Ozone last year, he has inducted several senior executives to give the overall performance of the company a big push. Jagdeep Oberoi was brought in as chief development officer, S. Kannaian as the head of Chennai operations, Nitin Pandey as president-strategy who is responsible for pan India and international business development and chief financial officer Shama Sundar R.J.
Apart from Metrozone in Chennai, Ozone has a large integrated township called Urbana, in north Bengaluru. “We are now looking at fresh project launches. There is a 60-acre plotted development in Chennai that we will launch and a premium residential development in Bengaluru,” Gopalan said.