In one of the largest real estate debt deals in India in recent years, Piramal Fund Management (PFM), the real estate-focused fund and funding platform, has invested Rs2,320 crore ($347 million) in various projects being undertaken by developer Lodha Group in Mumbai.
The funding, which replaces existing debt, will enable Lodha to complete and deliver marquee projects in South and Central Mumbai which are “at various stages of advanced construction and completion with established sales and locked-in receivables” according to a statement.
The projects are understood to include the signature World Towers in central Mumbai, with some of the capital being used to facilitate an exit for HDFC Property Fund, which invested Rs500 crore for a 10 percent equity stake in the World One residential tower in 2010, according to Livemint.com.
The latest deal has been structured as a fixed-return debt investment with periodic coupon payments and has security mechanisms in place including hard asset cover and an escrow of receivables.
Established in 1980, Lodha is India’s largest real estate developer and recorded gross sales of more than Rs8,000 crore in full-year 2015-16. It claimed the transaction would allow it to deliver its marquee projects on time as well as reducing its cost of funds and having a positive impact on its bottom line.
PFM is part of Piramal Enterprises, the diversified Indian company which has a presence in healthcare, healthcare information management and financial services. It is involved across the capital stack from early-stage equity to late-stage debt and construction finance.