Real estate firm Adarsh Developers is close to a financial turnaround, as it repaid a Rs 750 crore structured finance facility from Edelweiss Alternative Asset Advisors raised in 2022.
The repayment, aided by operational cash flow and lower-cost refinancing from banks, has helped the Bengaluru-based company reduce its cost of funds by 8-9 percentage points. The initial funding from Edelweiss, raised at over 20%, was used for reviving its residential projects and generating liquidity.
Edelweiss had lent the money in two tranches, with Rs 450 crore in the first instalment. While Adarsh Developers used part of the Rs 1,900 crore it raised from a land sale to Mapletree Investments earlier this year to repay Rs 450 crore, it continued to finance the remaining debt.
“When Edelweiss first lent in 2022, Adarsh was facing significant cash flow challenges,” said a person in the know of the development. “The turnaround has yielded Edelweiss returns of 20-25%, generating high yields for investors in this private credit fund.”
Adarsh Developers had raised the funds from Edelweiss in 2022 for three projects totalling 2.5 million square feet and 900 plots in Bengaluru from Edelweiss. The projects — Adarsh Savarna, Adarsh Wellin Park and Adarsh Lakefront — are currently under construction and are projected to be completed by the end of 2028.
Adarsh Developers borrowed Rs 385 crore from two banks, with the deal finalised on Thursday, according to two people familiar with the development. The Edelweiss loan has been refinanced at 12-13%.
“The company has commenced various projects which have enhanced cash flow and sold land, significantly improving our financial position,” said BM Jayeshankar, chairman and managing director of the Adarsh Group of Companies. “Adarsh is now in a favourable financial position and is planning to primarily focus on residential development, with some emphasis on commercial development.”
An Edelweiss spokesperson declined to comment.
Adarsh repaid Rs 1,270 crore of debt in the last two years through fundraising and using cash flow that has improved.
Earlier this year, Adarsh Developers sold 41 acres in Bengaluru to Singapore-based private equity fund Mapletree Investments for over Rs 1,900 crore, as part of its debt reduction strategy.
Edelweiss Special Opportunities Fund had extended a Rs 350 crore debt facility this year to Bengaluru’s Shreshta Infra Projects, a special purpose vehicle of Adarsh Developers. Shreshta Infra used the funds to complete two projects and repay debt to Oaktree Capital. The facility comprised non-convertible bonds at 20.5% annual interest, with a 41-month and 24-day tenor.
