Xander Finance Pvt. Ltd, the non-banking financing arm of alternative investment firm, The Xander Group Inc., has invested Rs 105 crore ($16 million) in a residential project of Bengaluru-based Skylark Mansions Pvt. Ltd.
According to Mint, a major portion of the funding will be used to provide an exit to Motilal Oswal Real Estate (MORE), the real estate investment arm of Motilal Oswal PE.
In 2015, MORE had invested Rs 55 crore in Skylark Dasos, located off the Hennur Road in Bengaluru. The project offers 1-, 2-, 3- and 4-BHK units. Part of the capital will go towards speeding up construction and other project-related expenses.
Amar Merani, managing director and CEO, Xander Finance, told the financial daily that the transaction also funds approval expenses and creates a line of credit for project construction.
According to Merani, opportunities for real estate lending have become tougher because “sales are far lower than before and a lot of existing transactions are leveraged to the hilt” and, therefore, refinancing has become tough.
According to provisional data available with VCCEdge, the data research platform of News Corp VCCircle, the real estate sector has clocked only 74 transactions during January-September 2017, down by almost 50% from the year-ago period.
A similar trend emerged for the three-month period ended 30 September. Only 18 deals were closed in the quarter, compared to the 36 deals in July-September 2016, data showed.
However, the value of capital flows perked up in the first nine months of 2017 primarily on the back of big-ticket transactions by India’s biggest real estate developer DLF and Singapore’s sovereign wealth fund GIC.
The real estate market has been going through a sluggish phase for a while now. Slowing sales and piling up inventory have increased the funding requirements of developers. Several NBFCs have also cashed in on the opportunity and have deployed capital aggressively.
In May, Xander Finance invested Rs 130 crore ($20 million) in the residential projects of Bengaluru-based Adarsh Developers Pvt. Ltd. The group’s other investments include Orris Infrastructure, Mahaveer Group, Supertech and Prateek Group.
A few other debt platforms, such as Altico Capital, L&T Finance and Piramal Fund Management, too, have been aggressively deploying capital.