NEW DELHI: Real estate developer Emaar MGF has raised Rs 600 crore from private equity (PE) fund SSG Capital Management for its projects in the National Capital Region. The funds have been raised against the security of two residential projects and one industrial park in Gurgaon, near Delhi, that the builder is developing. The builder will use Rs 75 crore to construct two of its projects in Gurgaon, which are at an early stage of development.
Around Rs 300 crore will be used to service the existing debt while Rs 125 crore will go towards development of the company's other projects. SSG Capital Management can redeem these debentures by July 31, 2021.
A spokesman for Emaar MGF Land confirmed that the company raised Rs 600 crore against issue of NCDs to SSG Capital Management in the current financial year. "The funds were used for our projects and corporate requirements," he said.
SSG Capital Management did not respond to an e-mail questionnaire sent by ET. The Singapore-based fund had recently put Rs 450 crore in a Noida project of builder Lotus Greens along with Clearwater Capital. Lotus Greens too had issued non-convertible debentures to the funds.
Home sales in the last few quarters have been a worry for developers across the country. Home sales across the top six cities of the country saw a quarter-on-quarter drop of 25% in the September quarter, the lowest since 2009, while unsold inventory rose to a high of 815,000 apartments, according to property research firm Liases Foras.
In the NCR, unsold inventory rose to 318,000 apartments, which would take 83 months to be sold at the current pace of sales. "Cash flows have been constrained for most developers today. The big challenge is to raise money on flexible terms, which would help a developer manage his stress for the next 12-14 months," said Anckur Srivasttava, chairman of GenReal Property Advisers.
He said that many developers are out in the market to raise this kind of money. "Today, pricing of capital is not such an issue. The more important aspect is the flexibility of the capital they are raising in terms of payment structures," he said. The spokesman for Emaar MGF said the last quarter of 2014 has shown positive growth, which was led by commercial sales.