North-based public-listed developer Parsvnath Developers Ltd and Rail Land Development Authority (RLDA), a unit of Ministry of Railways, have called off their proposed real estate project in Sarai Rohilla Kishanganj area in Delhi due to disputes over development agreement, the realtor said in a stock market notification.
It said the deal stands terminated due to certain disputes between the two sides that are pending adjudication before arbitral tribunals.
VCCircle first reported the development on February 12.
Parsvnath along with private equity firm Red Fort Capital (whose assets have moved to Rising Straits now) had bid for a 38-acre land parcel for over Rs 1,600 crore back in 2010. The land parcel was to be developed into a project comprising residential, commercial, retail and railways housing segments.
The PE firm had brought in roughly Rs 270 crore to pick up 49 per cent stake in the special purpose vehicle for the project.
Parsvnath has reportedly paid over Rs 1,000 crore in tranches. People directly involved in the proposed project had informed VCCircle that the developer has defaulted on payments of remaining instalments given the stress in the company. The two parties headed for arbitration and the project failed to kick off as a result.
Another person close to the financial structuring of the deal said the default lies on both the sides. “They (Parsvnath) have paid more than Rs 1,000 crore and this is the result of unfair treatment by the railways authority,” he added.
It could not immediately be ascertained if Rising Straits is taking a separate action to secure its investments. This comes at a time when the focus of the firm is to exit earlier investments and return money back to its investors. It recently exited Exora Business Park in Bangalore by selling its stake to the developer-owner of the project.
Red Fort Capital went through a split between its co-founders recently. All the assets of the firm have moved to newly created Rising Straits which is headed by Subhash Bedi. Parry Singh, the other co-founder, has retained Red Fort brand name and is stationed in the US these days to raise a core fund.
Meanwhile, industry analysts say that it is a major setback for the developer and it will be an uphill task for the firm to get the money back. The developer had earlier sold a mega township project to its peer Supertech Group for over Rs 700 crore to cut its debt. It is looking at divesting its land parcels to be a debt-free firm.