India’s second-largest real estate developer, Unitech, is currently in discussions with private equity (PE) funds regarding potential investments totaling up to $560 million (Rs 2,750 crore).
Financial Restructuring Efforts
The Gurgaon-based realty firm is also negotiating with banks to restructure an additional Rs 500 crore of loans. This initiative is part of a broader plan to reduce debt and secure funding to complete ongoing projects.
Investment Plans
Unitech plans to draw down $110 million (Rs 540 crore) from the Unitech Real Estate International Fund to invest in its real estate projects in the National Capital Region (NCR). When contacted, the company declined to comment on these developments.
Fund Commitments
Last year, Unitech received commitments of $330 million (Rs 1,620 crore) for its international fund, which was launched exclusively to raise money for the company’s residential projects.
Potential Funding Options
The realty major is also in talks with PE funds to raise $300 million (Rs 1,480 crore) at the corporate level and up to $150 million (Rs 740 crore) for specific residential projects being developed in Hyderabad and Kolkata. The company aims to finalize PE funding for its Hyderabad and Kolkata projects, developed through special purpose vehicles (SPVs), by the end of March 2009. Corporate-level PE funding is expected only after market conditions improve.
Debt Repayment
Unitech has acknowledged a debt of Rs 8,000 crore on its balance sheet, with Rs 2,500 crore due for repayment by March 2009. Of this amount, Rs 1,000 crore has already been restructured with banks, and negotiations are underway to restructure an additional Rs 500 crore. The company anticipates completing this process by the end of this month.
For the remaining Rs 1,000 crore, Unitech is exploring the sale of its Gurgaon-based hotel project and a project in the national capital’s Saket area.
Dispute with CLSA Report
However, a report by CLSA stated that Unitech needs to repay Rs 1,000 crore of debt to mutual funds this quarter, indicating potential trouble for the company. Unlike banks, the debt owed to mutual funds must be repaid by this quarter, according to the CLSA report. Unitech has disputed this report, asserting that the company does not owe debt to mutual funds.