Realty firm Saha Groupe has raised Rs200 crore through the sale of non-convertible debentures (NCD) to ECL Finance Ltd, the non-banking financial company (NBFC) of financial services firm Edelweiss Group.
The funds will be used by the Noida-based real estate developer to refinance an existing loan and towards land payments, two people familiar with the transaction said.
Saha Groupe, which has residental projects in Noida, Dehradun and Bareilly, raised around Rs110 crore from Kautilya Finance BV, an investment platform of Amsterdam-based Aevitas Property Partners, around mid-2016.
With this capital, Kautilya Finance will exit its investment in Saha Groupe’s projects. “We will use this debt to give an exit to Kautilya Finance and towards construction of three of our projects—two in Noida and one in Dehradun,” said Aniel Saha, chairman and managing director of Saha Groupe.
Shiv Wallia, managing director, Aevitas Property Partners, said he is overseas and didn’t comment.
“We have extended a Rs200 crore facility through our NBFC. Part of the facility went towards refinancing the existing debt and some of it for construction and land dues. The funds were given across a portfolio of projects,” confirmed an Edelweiss spokesperson.
Though the National Capital Region, India’s largest property market, has been the worst hit in the four-year-old real estate slowdown, home sales in Noida and Greater Noida have marginally fared better than in places such as Gurugram.
A number of Noida-based developers in recent months have raised debt, though most of them have been for refinancing purposes or to complete construction.
This year, Piramal Finance Ltd, a unit of Piramal Enterprises Ltd, lent Rs325 crore to Noida-based realty firm Mahagun Group. It also lent Rs425 crore to Prateek Group.
Refinancing is the predominant reason why developers are borrowing today, and they are looking to raise debt to replace existing loans and reduce the cost of borrowing, in some cases, as project cash flows remain limited.
“Majority of the domestic investments in real estate today, both from NBFCs and private equity funds, are mainly refinancing transactions. In a debt-centric market, investors have given money in anticipation that sales will return. But balance sheets of developers are fairly stretched with sales not happening resulting in more debt to finance existing loans. Real estate firms are feeling the pressure of repayment obligations,” said Shashank Jain, partner, transaction services, PwC India.