HDFC Capital invests $48 mn in Total Environment’s projects

Bangalore-based real estate developer Total Environment Building Systems Pvt. Ltd has raised Rs 300 crore ($48 million) from the offshore fund of HDFC Capital in the form of equity, the realtor said in a statement. 

“This investment brings in financial closure for five major projects currently under construction and will enable us to immediately infuse Rs 400 crore into the construction of these projects with the single objective of accelerating delivery,” said Kamal Sagar, founder and director, Total Environment. 

The company, which has so far delivered 30 projects across Bangalore and Pune, will also focus on smaller, affordable homes going forward. “We are coming up with five projects wherein we will have some part of the inventory in the rage of Rs 60-70 lakh against our typical ticket size of Rs 2-2.5 crore,” Kamal told VCCircle. Given the state of affairs in real estate where investors are not participating, developers are increasingly moving towards projects that cater to the needs of end users. Projects priced in the range of Rs 50-60 lakh and even lower still see some movement at a time when overall sales remains subdued. 

Meanwhile, HDFC Capital has made the investment from its newly launched offshore fund targeted at affordable housing in India. This marks the maiden deal of the new equity fund which is headed by Vipul Roongta. HDFC also separately runs real estate focused funds under KG Krishnamurthy.  

The deal comes at a time when equity capital is slowly making a comeback in real estate market. Equity deals were the norm of the day back in 2005-2008 but investors turned risk-averse post the global financial crisis. Most of the deals in the sector are now done through debt or structured debt route by both PE firms and NBFCs. 

Sagar also said the company is also separately working on a transaction to give exit to IndoStar who had put in Rs 255 crore across its projects in the form of debt. “We are separately raising debt capital to replace IndoStar and are in the last lap of closing the transaction. The current deal from HDFC is separate and proceeds will be used across projects as growth capital,” he said. 

Meanwhile, this is the first fundraising for the home-builder in one-and-a-half years. In December, 2014, it had sealed a bulk buying deal of Rs 60 crore with PremjiInvest, the personal investment arm of Wipro chairman Azim Premji.

In an interaction with VCCircle at the time, Kamal Sagar, chairman and managing director at Total Environment, had said the company planned to raise Rs 450 crore from PE players for a bunch of its projects.

The developer also has the backing of Brookfield Fund Managers, which came on board for a project in late 2014.

Total Environment has most of its projects in and around Bangalore. Its ongoing projects include Songs from the Wood (Pune), Pursuit of a Radical Rhapsody (Bangalore), After the Rain (Bangalore), The Magic Faraway Tree Phase I (Bangalore) and Windmills of your Mind. It is also coming up with next phases of some existing projects.

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