Gurgaon-based builder Orris Infrastructure has raised Rs 325 crore from non-banking finance company IndoStar Capital, making it the biggest funding deal in the stressed real estate market of Gurgaon this year. IndoStar Capital is backed by the likes of Everstone Capital, Goldman Sachs, Beacon India Private Equity Fund, CDIB Capital and ACP Investments.
Two people aware of the development said Orris has issued unlisted nonconvertible debentures to IndoStar. Amit Gupta, managing director at Orris Infrastructure, confirmed the deal and said the company will use the funds raised to repay old, high-cost debt. He said a part of the funds will also be used for working capital in some under-construction projects as well as for buying land. “We have pre-paid Rs 200 crore to Xander and Rs 65 crore to Religare,” Gupta added.
IndoStar Capital declined to comment. Property consultancy Knight Frank, an adviser to the transaction, declined comment. Xander had invested Rs 200 crore in one of Orris’ residential projects in Gurgaon in 2013, while Religare had put in around Rs 70 crore last year.
Home sales in the National Capital Region slumped 14% year-on-year in the quarter to June, according to data from property research firm Liases Foras. But on a quarter-on-quarter basis, sales were up 14%. While the larger market might be slow, builders with a track record of delivering projects and repaying investors on time have been able to raise funding even in the current market. In the last few months, Noida-based ATS Infrastructure has raised Rs 130 crore for a new housing project in Noida from ICICI Prudential AMC.
Ghaziabad-based real estate firm Saya Group had raised Rs 200 crore from Edelweiss to finance its group housing project Saya Homes.
Some builders have raised funds to retire high-cost debt. Emaar MGF, for instance, had raised Rs 600 crore from private equity fund SSG Capital Management, much of which was used for servicing existing debt.
Late last year, private equity funds Clearwater Capital and SSG Capital Management had put in Rs 450 crore in sports city township of Noida-based builder Lotus Greens. Builders are now betting on the coming festive season to perk up home sales in an otherwise slow market.
They are hoping that a reduction in home loan rates and an improving economy would do the trick for them. At the moment, many of the builders have resorted to offering flexible payment plans to entice buyers.