Essar’s Realty Arm May Repay Entire 1,400-cr Debt in A Year
Sobia Khan & Kailash Babar
Bengaluru | Mumbai: Equinox Realty, the real estate arm of the diversified Essar Group, plans to repay its entire .₹ 1,400-crore debt over the next one year, using proceeds from the sale of two projects, one each in Bengaluru and Mumbai.
But the group isn’t exiting real estate business, a top Essar executive told ET, dousing rumours stirred up by the recent deals to sell the properties. Sudip Rungta, executive director, M&A, told ET that the company will focus on the realty market in metro cities.
In March, the company sold its under-construction luxury residential project, Water’s Edge, in Bengaluru to developer SNN Builders for .₹ 300 crore. The project comprises construction of residential space of 2 million sq ft and is estimated to generate revenue of .₹ 1,200 crore.
In another transaction in February, Essar entered into a pact to sell its 1.25-m sq ft commercial project, Equinox Business Park, near Mumbai’s BKC to RMZ Corp for around .₹ 2,400 crore.
The deal for the ready and leased out property is the largest real estate transaction so far this year. It is being done in two tranches.
“We at Essar operate more like a fund; we build businesses and depending on the market condition, monetise them at a later stage,” Rungta said. “The sale of real estate assets is part of the company’s strategy.The focus is to deleverage balance sheet across businesses. We (realty business) will be debt-free in the next one year.”
He said the group is consolidating its real estate business and not exiting it.
“Given the entire investment thesis, we can never say we will exit real estate business. We will rather focus on property market in key metros, and what shape this business takes will depend on growth opportunities,” he said.
Proceeds from the Bengaluru deal will flow in soon as the deal gets concluded by mid-May. The first instalment of money from the Mumbai transaction is expected in the next two months.