Altico Capital to finance 450 cr project in Mumbai

The non-banking financial company (NBFC) of Asia-focused investor Clearwater Capital Partners LLC, Altico Capital India Ltd. Has given Rs.450 crore of debt financing to an upcoming residential project in Mazgaon, south Mumbai.

The project will be a joint venture of Radius Developers and Sumer Group which is yet to be launched.  Under the plan, five 65-storey residential towers measuring 3 million sq. ft of saleable area will be developed.

The transaction is structured in the form of non-convertible debentures (NCD) with a four-year tenor, where the funds will be disbursed in tranches. The finance will be used to acquire the project from the land owner, settle tenants on the land and to start project construction.

Funding to the realty sector in the past three years has largely been in the form of structured debt financing, with both private equity (PE) funds and NBFCs aggressively lending to developers, giving the latter a much-needed source of capital especially when cash inflows have dried up due to weak sales.

“This was an exciting opportunity to back one of the most promising real estate entrepreneurs in Mumbai early in his new corporate evolution,” said Karthik Athreya, managing director of Altico Capital. “Our business is built around the significant existing opportunity to meet the capital needs of capable developers, who are in their growth stage with multiple projects that can enable their own growth besides repaying our debt at attractive IRRs (internal rate of returns) of over 18%,” he added.

Speaking on the deal, Sanjay chhabria, Managing Director of Radius Developers said, “We plan to launch the project early next year. The property is at a great location in south Mumbai and is ideal for residential development.”

Structured debt transactions in real estate are getting larger, sometimes with PE funds and NBFCs collaborating to do bigger-sized deals to meet developers’ demand for capital.