Lodha Group in Talks with KKR, CPQD, Bain Capital to Raise $181M For Project Completion  

 

Relevant Documents:
Lodha Draft Prospectus for India Listing
Notes due 2020 OM
Lodha earnings call transcript Oct. 21, 2018

Lodha Developers Ltd. is in talks with credit funds including KKR India Finance, Bain Capital Credit, Caisse de dépôt et placement du Québec (CPQD) and Edelweiss, to raise as much as INR 13 billion ($181 million) to complete work on four of its Mumbai real estate projects, sources familiar with the situation said.

The developer has approached the funds looking for a structured deal for its housing projects in Palava City and other city projects, the sources said. Canadian investment firm CPQD has previously been reported as in talks to invest INR 7 billion ($97.9 million) in Lodha Group’s Palava City in Maharashtra.

The blend of debt under discussion varies between funds but is expected to mix equity and mezzanine financing. A first priority charge over assets is also under discussion, the sources said.

Lodha is struggling with a debt load of $2.5 billion and filed a listing prospectus on April 26 this year that was planned to raise approximately INR 50 billion via its Lodha Developers Limited entity. The IPO was delayed as markets turned against Indian real estate, which is troubled by oversupply and unfinished or unsold inventory.

Lodha Developers Limited on Dec. 14 published their consolidated financial results for the third quarter ended Sept. 30, 2018 reporting INR 53.873 billion in total income, up 29.1% year over year. Nonetheless, due to project costs increasing 56.3% year over year, profit before tax ended up declining 25.9% to INR 4.609 billion.

Total profit declined 49.7% year over year to INR 3.131 billion.

Lodha plans to sell two London residential projects -- Lincoln Square on Carey Street and 1 Grosvenor Square in Mayfair may take more time to complete due to Brexit, sources said. The company has targeted raising INR 43 billion to reduce debt by selling the properties to an international fund.

Lincoln Square on Carey Street and 1 Grosvenor Square in Mayfair have achieved financial closure with development finance facilities tied up to meet future construction expenses. Lodha, through its units had increased its effective stake in the Lincoln Square project to 76.25% and in the 1 Grosvenor Square project to 78.63%, according to the prospectus dated April 26, 2018. As of Dec. 31, 2017, 114 units were sold for £277.7 million, according to the prospectus.

KKR, Edelweiss, Bain Capital, CDPQ, and Lodha did not respond to requests for comment.

Reorg’s previous coverage on Lodha Developer’s refinancing risk can be found here.