Piramal Fund Management (PFM), part of the Ajay Piramal led-Piramal Enterprises, has invested Rs 425 crore in a central Mumbai project being developed by Lodha Group, a statement from the real estate developer said.
The deal follows the recent downgrade of Lodha by international ratings agency Moody’s. On May 17, Moody’s downgraded the corporate family rating of Lodha Developers (LDPL) to B1 from Ba3.
Moody’s also downgraded the senior unsecured debt rating of the US dollar denominated bonds issued by Lodha Developers International Limited and guaranteed by LDPL to B1 from Ba3.
According to information sourced from the industry, the project is an upcoming one in Parel called Lodha Azzuro and is being developed by a 100% subsidiary of Lodha Developers, the flagship company of Lodha Group. The funds will be used to build premium residences in the project having more than 5 lakh sq.ft. of saleable area. According to the statement, the project is already 40% sold.
The deal has been structured as a fixed- return debt investment with periodic coupon payments. It also has “hard asset cover as well as escrow of receivables,” the statement said.
Commenting on the transaction, Khushru Jijina, managing director, Piramal Fund Management said, “This is our first structured deal with the realty developer. We look forward to deepening our ties as we evaluate their portfolio of projects”.
Meanwhile, Abhishek Lodha, managing director, Lodha Group called this another step in the company’s endeavours to “grow the pool of credible funding partners”.
Moody’s kept the outlook on Lodha’s ratings as negative. “The negative outlook reflects a challenging operating environment for real estate companies in India and the company’s weak credit metrics and liquidity position,” Moody’s observed. Vikas Halan, Moody’s vice president and senior credit officer observed in a statement that the downgrade reflected Moody’s expectation that the company’s credit metrics “will fail to improve to a level more appropriate for its ratings over the next 12-18 months”.