Omkar Realtors & Developers Pvt. Ltd has raised Rs125 crore of debt from KKR India Asset Finance Pvt. Ltd, a local unit of the global private equity firm, said a senior company executive.
The three-year facility has been raised through Accord Builders, an Omkar group firm. The money would be used to finance construction of two residential projects near Bandra Kurla Complex (BKC) in Mumbai, said Gaurav Gupta, director, Omkar Realtors & Developers.
One of the projects, Meridia, would consist of 181 apartments and is expected to start delivery to buyers by January. The other project, Vive, with around 179 units, is likely to be completed in the first quarter of 2020.
“Our relationship with KKR has taken off with an investment in our boutique projects and we look forward to carrying this relation to our bigger projects in the near future,” Gupta said.
KKR India Asset Finance, a non-banking financial company (NBFC), was set up four years ago to focus on lending to residential projects in top cities in India. KKR India did not respond to email queries.
As of 31 March, KKR had invested some $3.2 billion in Indian companies through its private equity business, and has provided more than $3.5 billion of financing to companies through its corporate- and real estate-focused NBFCs.
The last four years have seen investments from private equity funds and NBFCs picking up in the real estate sector while bank loans to property developers for projects under construction significantly declined during the period.
Most of the funding from PE firms comes in the form of structured debt and is commonly used for refinancing loans or takeover of existing debt, last-mile project funding, and construction finance for developers who may not be able to get bank funding.
According to a September report by research and consulting firm, investments by PE funds and NBFCs jumped to $4.6 billion in 2016 from $900 million recorded three years ago while bank loans for under-construction projects was down to $1.3 billion from $4.4 billion during the period.
Last year, Omkar Realtors & Developers raised Rs120 crore from Peninsula Brookfield Investment Managers Pvt. Ltd, a joint venture between developer Peninsula Land Ltd and global alternative asset manager Brookfield Asset Management. Under this transaction, the PE firm bought apartments worth Rs120 crore in the Mumbai-based developers’s luxury residential project in south Mumbai.
Piramal Fund Management Pvt. Ltd has also been one of the significant investors in Omkar group. The property investment platform of Ajay Piramal-owned Piramal Enterprises Ltd has invested around Rs1,400 crore in Omkar’s ongoing luxury project Omkar 1973 at Mumbai’s Worli, including Rs1,200 crore debt and Rs200 crore in equity.
Madhurima Nandy contributed to the story.
Source: Mint