M3M India raises Rs 1,250 cr from Indiabulls Housing
NEW DELHI: Gurgaon-based real estate developer M3M India has raised Rs 1,250 crore from Indiabulls Housing Finance and used Rs 700 crore of this money to pay the final installment to Sahara group, concluding a deal to acquire 185 acres of land in Gurgaon for 1,211 crore, said two people with knowledge of the development.
M3M will use the rest Rs 550 crore to repay existing debt and for other general corporate purposes including buying new land, one of the persons quoted above said, asking not to be named.
The money has been raised by M3M through a structured debt transaction by discounting the cash flows of M3M’s high-end Golf Estate project in Gurgaon.
“Of the total raised, around Rs 260 crore is part of an existing construction loan facility from a bank that Indiabulls Housing Finance has taken over,” said the second person.
An email questionnaire sent to M3M did not elicit any response. A spokesman for Indiabulls denied the deal but said they had sanctioned a construction finance facility of around Rs 400 crore to the company.
M3M’s deal to buy 185 acres of land at Chauma near the Delhi-Gurgaon border was one of the biggest land deals in 2014. The land has been sold for a mixed-use development and the company had said that it has revenue potential from sales of around Rs 12,000 crore over 6-8 years.
In January 2015, the company had paid an installment of Rs 300 crore for the land. Pankaj Bansal, director at M3M had said at the time it had agreed to buy the land from Sahara that it plans to build a mixed-use development on the land parcel which will have serviced apartments, hotels, offices, branded residences as well as entertainment centres among other things.
In response to an email questionnaire sent by ET, Manish Aggarwal, managing director, NCR at property advisory firm Cushman & Wakefield, which was the transaction advisor to the deal, declined to comment.
In the current slow real estate market, only a handful of builders have raised funding in recent times to buy land.
Most of them today are faced with a tight liquidity situation and are seeking funding NBFCs and other funds to complete their under construction projects, which in many cases in are delayed, and also to refinance their older loans.
Last year, Ghaziabad-based builder VVIP raised Rs 120 crore from Reliance Capital to speed up construction. Noida-based Supertech raised Rs 100 crore from Indiabulls Real Estate Fund. Noida-based Prateek group had raised Rs 100 crore from Xander Finance for its township project in Ghaziabad. Xander Finance also put in Rs 120 crore with Bengaluru-based real estate firm Mahaveer group.
Recent data on housing sales have shown a ray of hope. Data from property research firm Liases Foras shows home sales across the 8 top cities of India improved 6% year-on-year in the January-March 2016 quarter because of stagnant pricing, discounts from builders and also new launches at lower prices in some cities.
On a y-o-y basis, sales in the NCR were up 33% and that in Mumbai rose 12%, while Bengaluru saw sales drop 18%. Prices remained flat in Mumbai while NCR saw a correction of 3% compared to a year ago, helping developers push their stock.
Late April, markets regulator Sebi roped in HDFC Realty and SBI Capital Markets to sell around 60 properties owned by the Sahara group, which has not been able to deposit Rs 10,000 crore that was required to free its jailed chairman. The court on March 29 had asked Sebi to dispose of Sahara properties.