The India associate of UK-based Red Ribbon Asset Management PLC would raise over Rs 100 crore from a clutch of institutional lenders and high networth individuals to fund its “incubated venture” Modulex, a construction company that specialises in ready-to-plug modular buildings. Red Ribbon would seed the company investing Rs 22 crore; about Rs 64 crore would be mobilised from banks and the remaining Rs 40 crore would be sourced from Indian investors, Red Ribbon India CEO Aditya Kanoria told ET. Modulex is setting up its first India plant on a 40-acre site at Indapur in Maharashtra. The company intends to introduce modular construction, which has been popular in the west for over 7 decades. Once the factory is set, Modulex will start bidding for construction projects in the country. Modular technology entails “high degree of offsite finishing,” where in nearly 90% of the construction work is completed on the builder’s premises. Simply put, parts of the structure are built in factories (of the builder), then transported to the site (of the new building) and assembled on traditionally-curated foundation. “This is one of the fastest methods to construct buildings. Using modular blocks, a 100-room hotel can be made ready for occupation in 26 weeks,” said Kanoria. “Also the steel frame that is laid out to support the structure is more durable and long-lasting than concrete. It also provides greater resistance to environmental factors, require lesser number of labourers and on-site installation is very quick,” he adds. Red Ribbon as incubator Modulex is Red Ribbon Asset Management’s first incubated venture in India. The company focuses on starting “asset-heavy businesses,” roping in strategic investors at investment phase and listing on stock markets at growth phase. The company also has a hotel and wind energy project under its belt. That apart, the company will also invest in start-ups promoted by other entrepreneurs and also help them raise funds from investors. “We’ve formed a wide network of IFAs and wealth managers to showcase our start-up projects to rich investors. If they like the idea, they can invest in our picks; we’ll also invest in all companies we select,” Kanoria added. The investment tenure is generally five years and minimum investment per investor is Rs 5 lakh. The investment termsheet is drawn between the Investor and the start-up entrepreneur; at this level Red Ribbon acts like a merchant banker, helping start ups to raise funds at commission rates ranging between 5 – 8%. “Our idea is to prompt the start up entrepreneur to issue convertible debentures for 4 years and 364 days, bearing a coupon rate of 15% PA. At the fifth year, the investor can exit his investment or continue as an equity partner (pursuant to conversion of debentures). The investor can exit when the company goes public or when a strategic investor comes to pick stake,” Kanoria explained. Red Ribbon has managed (investment) commitment worth Rs 7 crore from 75 investors. A lion’s share of these funds is from smaller cities like Moradabad, Philibhit, Navsari, Surat, Coimbatore and Jaipur, Kanoria added.
Source: Economic TimesUK-based Red Ribbon to raise Rs 100 crore to fund its “incubated venture†Modulex.
Industry: Realty 2016-02-24
