Non-banking financial company Altico Capital has invested Rs 300 crore ($45 million) in a township project of Pune-based developer Kumar Urban Ltd (KUL), the NBFC said in a statement.
The investment has gone to residential township project KUL Ecoloch which is located near Hinjewadi in Pune. The project is positioned as a mid-segment offering and has 1, 2 and 3 BHK units with a total saleable area of more than 3 million sq ft.
The proceeds would be used to retire debt from exiting lenders and for construction purpose, it said.
“The project location, specifications, sales and construction progress, promoter resourcefulness as well as significant track record of the KUL Group in the Pune market were the key drivers for Altico Capital’s investment in the project,” said Sanjay Grewal, chief executive officer of Altico Capital.
Through this transaction, Altico Capital has strengthened its presence in the Pune market, he said. “The overall exposure to this key market should cross Rs 1,000 crore soon with our focus remaining on providing capital to developers focused on mid-income and affordable residential projects in established locations,” he said.
The deal adds to the portfolio of projects the lender has in the Pune property market. In the last couple of months, it has sealed back-to-back deals that include a transaction worth Rs 240 crore with Marvel Realtors for a bunch of its projects; a Rs 180 crore investment with Pharande Group to back its projects L-Axis and Woodsville on Spine Road.
Garewal said the Pune market for budget projects remains stable driven by end users with approximately 15,000-20,000 units being sold in the last six months. “The inventory levels have come down sharply due to new launches being deferred by developers given their focus on completing existing projects,” he said.
Outside of Pune, the firm has backed projects of developers such as Bangalore-based Legacy Group, Mumbai-based Midcity Group for a redevelopment project and Unishire Group in Bangalore for a bunch of five projects. In a recent statement, the company had said that it would invest roughly Rs 750-1,000 crore in Bengaluru real estate market this financial year.
Altico Capital, which is backed by Clearwater Capital, Abu Dhabi Investment Council and Varde Partners, has been aggressively investing in the residential real estate market in India. It recently added the commercial segment to its investment mandate and plans to deploy Rs 3,000-4,000 crore on an annual basis across both the segments of tier-one cities.
Given the slump in the real estate market, developers have been increasingly borrowing from NBFCs to replace exiting lenders and finish construction of projects. The stress in the market has offered a healthy opportunity to NBFCs to deploy capital aggressively as they offer flexibility to realtors but at a slightly higher cost.
The total capital flow in the sector stood at $1.6 billion through both debt and equity in the first half of 2016, as per VCCEdge, the data research platform of News Corp VCCircle. Of this, a major portion was invested in the form of debt from NBFCs and private equity firms.
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