Lodha group in talks with PEs to raise $180 m

Lodha group in talks with PEs to raise $180 m
The Economic Times, July 6, 2009, Page 5

Sanjeev Choudhary NEW DELHI

MUMBAI-based realty firm Lodha group is in talks with three private equity players to raise $180 million (around Rs 850 crore) for its three projects, a senior company executive said.

“We are in active negotiations with private equity funds for three projects and are looking at an average deal size of $60 million for each project,” Lodha group director Abhisheck Lodha said, adding any of these potential deals may take more than a month to be closed.

The Rs 2,200-crore privately-held group, which already has Deutsche Bank, J P Morgan and ICICI Venture as investors, is scouting for PE investments in an affordable residential project, a high-end office project and a back-office building project. Mr Lodha said all three projects are located in Mumbai or its suburbs, but didn’t name the projects. The Lodha group had received PE investments worth $200 million in 2008 and $450 million in 2007, including $410 million by Deutsche Bank.

Mr Lodha says private equity funds have become selective in investing in the property market and are looking at smallticket deals now, but “money is available.” As real estate went into a slump last year, with sales diminishing and credit becoming tight, private equity funds too vanished from the market. With property prices now falling and developers willing to offer higher returns, interest among PE players seems to be returning. Recently, private equity fund Red Fort Capital invested Rs 90 crore in a Parsvnath Developer’s premium housing project in Delhi.

Lodha group, known for building premium and luxury homes priced between Rs 75 lakh and 35 crore at top locations in Mumbai, too has meanwhile shifted its strategy and is focusing on lower priced homes in order to drive sales. “We expect to take the contribution of our affordable segment from 15% in current revenues to 25% by 2011,” said Mr Lodha, adding that the company has sold around 2,500 affordable apartments in the past six months. For Lodhas, affordable mean houses priced between Rs 10 - 50 lakh. Its Casa Bella project is offering a 550 sqft home for Rs 12.5 lakh. The company is currently constructing 30 projects worth 27 million sqft, 80% of which fall in residential segment.

Mr Lodha said volumes have picked up in the property market and prices have started to firm up. He says property prices have already moved up 5-10% in Mumbai since March.

GROUND REALTY

The Rs 2,200-cr privately-held group is in need of investments for an affordable residential project, a high-end office project & a back-office building project

Lodha group, known for building premium & luxury homes priced between Rs 75 lakh and 35 crore at top locations in Mumbai, is now focusing on low-priced homes to boost sales