Kalpataru subsidiary secures Rs 525 Cr for Mumbai towers.

Post by : Dr. Amrinder Pal Singh

Image credit-The Economic Times

A company within the Kalpataru group has successfully raised INR 525 crore in debt facilities from PAG, a prominent global alternative investment firm, to expedite the completion of ten residential towers situated in the suburbs of Mumbai. The financing was extended through Asia Pragati Strategic Investment Fund, a fund managed by PAG, and was structured in two tranches as non-convertible debentures (NCD).

The internal rate of return (IRR) for the raised funds is reported to be 18.75%, according to sources familiar with the matter. The subsidiary benefiting from this financial infusion is Alder Residency, wholly owned by Abhiruchi Orchards, which, in turn, is a wholly owned entity of the Kalpataru group. Despite media coverage, PAG Asia and Kalpataru refrained from making official comments on the development.

The capital raised from the debt facilities is earmarked for the completion of the Kalpataru Vivant residential project, encompassing ten towers in the Mumbai suburbs. The estimated project cost hovers between INR 750-800 crore, as revealed by insiders. To further streamline its financial structure, Alder Residency had passed a resolution in October to secure an additional INR 620 crore through NCD.

Notably, PAG's involvement in the financing is underscored by the issuance of secured unlisted and listed bonds in November, totaling INR 475 crore and INR 49 crore, respectively. Both bonds are set to mature on April 30, 2027. The proceeds from these bonds are allocated towards repaying high-cost debt incurred during the development of Kalpataru Vivant.

In terms of guarantees, the promoter, Parag Munot, has provided a personal guarantee, while Abhiruchi Orchards has extended a corporate guarantee to PAG against the funds raised by Alder Residency. Additionally, the fund holds a first-rank exclusive charge on the registered mortgage and development rights of the property.

India Ratings, in a statement, disclosed that by the end of June 2023, Alder Residency had absorbed approximately 24% of the overall development cost, which encompasses 10% of the total construction cost for the project. Management further reassured that all necessary approvals for eight towers had been secured, with the third floor for the remaining two towers expected to receive approval by end-September 2023. The financial maneuverings and strategic investments underscore the dynamic nature of the real estate development landscape in Mumbai, where key players collaborate to drive significant projects to completion.

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