Edelweiss Special Opportunities Fund provided a Rs 350 crore debt facility to Bengaluru-based realty company Shreshta Infra Projects Pvt Ltd, partly to complete two projects and also to repay debt raised from Oaktree Capital, said two people with knowledge of the matter.
The debt facility is in the form of listed secured and rated non-convertible bonds having a tenor of 41 months and 24 days. The bonds are priced at 20.5%, payable annually, and the borrower would have to pay a prepayment penalty if the bonds are redeemed within one year of the allotment date.
Shreshta Infra is a special purpose vehicle floated by Adarsh Developers, which is constructing properties in Bengaluru.
Shreshta Infra will on-lend Rs 200 crore in the form of compulsorily convertible debentures to two of its affiliate companies — Adarsh Nivaas Pvt Ltd and Adarsh Realty and Hotels Pvt Ltd, according to an information memorandum (IM) filed by the company with the Bombay Stock Exchange. The two affiliates will use the money to repay the debt raised from alternative investment firm Oaktree two years ago, the document stated.
Of the remaining Rs 150 crore, Shreshta Infra will use Rs 50 crore to finance two projects — AWP Villas and AWP Apartments — and Rs 100 crore for general corporate purposes, the IM stated.
As per the terms, the project cost should not exceed Rs 285 crore for AWP Villas and Rs 657 crore for AWP Apartments.
However, the project cost of the AWP Villas can be increased if the incremental cost is offset by incremental revenue, which is above Rs 9,500 per square feet. For AWP Apartment, cost escalation can be permitted if the incremental revenue is above Rs 6,600 per sq ft.
The Edelweiss Group did not respond to ET’s request for comment.
In the past, two funds of the Edelweiss Group had provided funding to the Shreshta Group. The IM shows that the real estate company owed Rs 57.3 crore to the ISAF III Onshore Fund and Rs 127.7 crore to the India Special Assets Funds III as of December 31, 2023.
“The Rs 185 crore funding (by the two funds) has exclusive collateral, which is completely ringfenced and bankruptcy remote. They have funded against already sold inventory,” said a third person.
Acuite Ratings assigned the ‘Acuite B Stable’ rating to the Rs 350 crore bonds of Shreshta Infra on December 29.
The Adarsh group had total sales receivables of Rs1,034 crore as on March 31, 2023, and committed receivables of Rs 866 crore from the unsold inventory. The cash and bank balance of the group totalled at Rs 54.8 crore, Acuite’s rating report said.
