Lodha Devel­op­ers to raise Rs5000 crore, wind up UK busi­ness

HT Estates - - FRONT PAGE - Mad­hurima Nandy and Bidya Sa­pam mad­[email protected]

BENGALURU/MUM­BAI: Mum­baibased real es­tate firm Lodha Devel­op­ers Ltd (LDL) will raise just un­der Rs5,000 crore, by sale of its eq­uity in­ter­est in its two projects in Lon­don for around Rs4,200 crore and the re­main­ing through pri­vate eq­uity fund­ing for projects in In­dia.

Lodha’s exit from its un­der­con­struc­tion Lon­don projects – 1 Grosvenor House and Lin­coln Square- would mean that the de­vel­oper will now solely fo­cus on its do­mes­tic projects, which are mainly lo­cated in Mum­bai Metropoli­tan Re­gion (MMR).

“... The board of LDL is fo­cussed on en­sur­ing a sig­nif­i­cant up­grade in its rat­ings in the next 12 months with a goal of be­ing in the AA cat­e­gory.

As a part of this process, LDL is sell­ing its eq­uity in­ter­est in the two UK assets for about Rs4,200 crores – this will bring sig­nif­i­cant cash i nto LDL and strengthen its bal­ance sheet,” a Lodha spokesper­son said.

TheUKpro­ject­saresched­uled for com­ple­tion in 2019-2020.

The projects are funded by lenders and­have­clocked sales of around GBP 500 mil­lion.

Lodha UK, the arm that de­vel­ops th­ese projects, will con­tinue to be the de­vel­op­ment man­ager of th­ese projects and fin­ish con­struc­tion.

On Wed­nes­day, The Eco­nomic Times re­ported that Lodha is close to sell­ing off its two projects in Lon­don to an in­ter­na­tional fund to pare debt.

Lodha’s to­tal debt is around Rs18,000 crore, and in July the company said that it would use around Rs4,500 crore from the pro­ceeds of the ini­tial pub­lic of­fer­ing (IPO) to re­pay debt.

The de­vel­oper, which is con­sid­ered to be the largest in terms of home sales, filed for an IPO ear­lier this year to raise around Rs5,000 crore, mak­ing it the big­gest real es­tate pub­lic float since DLF’s Rs9,187 crore IPO in 2009.

Given the unfavourable stock mar­ket con­di­tions, Lodha will hit the mar­ket only next year now, and may re­duce the size of the IPO, twopeo­ple fa­mil­iar with the de­vel­op­ment said.

Shob­hit Agar­wal, manag­ing di­rec­tor and CEO, Anarock Cap­i­tal said it’t’s a bril­liant strate­gic plan B which is well ex­e­cuted.

“... To­day the name of the game is to delever­age. Not just Lodha, but in­clud­ing the NBFCs, all have do bring down their debt. If you have some­thing to mon­e­tise and re­duce debt, it’s the most log­i­cal step to do right now. Lodha is not do­ing a dis­tressed sale (of the Lon­don prop­er­ties). It’s a con­scious busi­ness call to fo­cus on In­dia,” Agar­wal said.

Both Lodha and In­di­a­b­ulls Real Es­tate Ltd (IBREL) bought prime­prop­er­ties in UKin2013-14 in a bid to di­ver­sify their port­fo­lios.

IBREL launched its project HanoverBond—acol­lec­tion of 80 apart­ments and a five- star ho­tel— in March, 2017 and opened book­ings for cus­tomers.

Lod­ha­clocked aroundRs4,200 crore in sales for the April-Septem­ber pe­riod and ex­pects sales to go up by 10% in the cur­rent fis­cal over the Rs8,150 crore in 2017-18.

DUE TO UNFAVOURABLE STOCK MAR­KET CON­DI­TIONS, LODHA WILL HIT THE MAR­KET ONLY NEXT YEAR NOW

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