Shapoorji real estate arm agrees Rs 750 crore debt financing deal

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Shapoorji Pallonji Real Estate (SPRE) has raised $100 million (about Rs 750 crore) from non-banking financial firm Asia Pragati, people familiar with the matter have said. This is one of the biggest real estate debt financing deals this year.

According to some sources, the SPRE opted for structured debt financing at a rate of approximately 20%. The NBFC normally hedges its loans to developers twice, sources said. Asia Pragati is part of Hong Kong-based global investor PAG.



The consultants said the deal was significant given the overall cash crunch faced by developers as well as NBFCs. They said the deal was significant because NBFC is now selling developer loans to go lean. “The SPRE had to meet certain debt payment obligations, which is why it entered into this agreement,” the sources said, adding that the SPRE also took a moratorium on debt payment on a selective basis.

SPRE chief executive Venkatesh Gopalakrishnan declined to comment. A letter sent to Asia Pragati elicited no response until it was time to go to the press. Anarock Capital, which was an adviser in the deal, also declined to comment.

According to a few reports, the Shapoorji Pallonji Group is in talks with Brookfield to raise $400 million to pay off its debts. The group is also looking to sell solar assets to toll roads. It must pay off about $950 million in debt by 2021, according to a Bloomberg report.

Gopalakrishnan had said in May that the company would hit 60-70% of sales in six months. He also said the company would increase the share of three-bedroom apartments to meet work-from-home needs.


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The deal comes at a time when NBFCs and housing finance companies are selling their portfolios to special situation funds. Covid-19 and the lockdown have made developer lending even riskier for NBFCs. Although estate agents could benefit from a moratorium until August, they could find it difficult to return the money to lenders, experts said.

Over the past two weeks, more than Rs 6,000 crore of such loans have been sold or refinanced by companies like Indiabulls Housing Finance. And, about Rs 8,000 crore of these loans could be refinanced in FY21, said bankers who handle such transactions. Developers are also facing severe headwinds as home sales hit a 10-year low.

On her website, Asia Pragati says she has no debt – a rarity among NBFCs. The firm lends with an emphasis on special situations, real estate, distressed assets and structured transactions. According to sources, Asia Pragati is also in talks with other developers to loan.

Saurabh Shatdal, Managing Director of Capital and Land Markets at Cushman & Wakefield, said: “The Indian property market is going through a difficult time given the backdrop of Covid and the NBFC crises. These times have created opportunities for companies like Asia Pragati to address developers’ immediate liquidity issues through last-mile financing and priority LIFO (last-in, first-out) structures.

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