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Lavasa Corporation Ltd, which is developing a hill township near Pune, has raised Rs 250 crore from India's largest private sector lender ICICI Bank Ltd through quasi-equity instruments. 

Lavasa, which is a subsidiary of Hindustan Construction Company Ltd, has said the investment will come through convertible debentures. Lavasa has also raised another Rs 750 crore through the same instrument from other banks such as Axis Bank Ltd., Bank of India, Allahabad Bank, Indusind Bank, Andhra Bank, and United Bank of India. 

The last investment came in July 2009 from IndusInd Bank, which pumped in Rs 50 crore at a valuation of Rs 10,000 crore. The valuation for this round of funding was not disclosed.

Convertible debentures are debt instruments which can be converted into some other security, usually equity shares. Debentures are instruments which are not secured by physical asset or collateral.

The banks may look to convert these instruments in the future to get the upsides as Lavasa is planning a public offering in the second or third quarter of the next financial year. The project is expected to be operational by December 2010. Other promoters of Lavasa are Venkateshwara Hatcheries and Gautam Thapar's Avantha Group.

The Lavasa project, which is close to Mumbai and Pune, is being developed over an area of 12,500 acres. Besides residential areas, the town is expected to have business, educational and recreational facilities. It has in the past tied up with Accor, ITC and Apollo Hospitals to develop their facilities at Lavasa. It has also tied up with Oxford University and would be developing SpaceWorld, a 65-acre edutainment park powered by US-based National Aeronautics and Space Administration (NASA).

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