BENGALURU/MUMBAI: Private equity firm Xander Advisors India has invested around Rs 280 crore in a residential project of realty developer Kumar Urban Development, two people with direct knowledge of the transaction said.
"The deal was closed last week and it will be a structured transaction, which includes private placement of non-convertible debentures (NCDs)," one of these people said.
NCDs are unsecured bonds that cannot be converted into the company's equity or stock and usually carry higher interest rates. This instrument, which offers healthy yields of 14-18%, has emerged as this year's tool-of-choice for real estate firms to raise money amid tight liquidity as banks continue to be selective in extending loans to developers.
The company will use the funds raised for developing a slum rehabilitation project in Pune. The proposed project at Karve Road, a central part of the city, is estimated to have 1 million sq ft of saleable space. The company is working on configurations and pricing of apartments here.
Currently, residential property rates in the locality are in the range of Rs 9,000 to Rs 11,000 per sq ft.
Email queries to both Kumar Urban Development and Xander Advisors India did not elicit any response until the time of going to press. Transaction advisor Cushman & Wakefield also declined comment for the story.
Private equity funds have been increasingly investing in the Indian real estate sector with builders looking to raise money in the backdrop of slow sales and tight liquidity. According to Cushman & Wakefield, private equity investments in real estate more than doubled in 2014 toRs 15,410 crore, indicating renewed interests among domestic and foreign investors for the Indian real estate sector.
In a recent such transaction, Aditya Birla Real Estate Fund invested Rs 150 crore in Bengaluru-based realty developer Ozone Group though non-convertible debentures.
Kumar Urban Development is currently selling 32 projects, of which 18 are under development spread over 6.2 million sq ft in Pune and Mumbai.