Parsvnath hopes to tie up private equity funds by December

Parsvnath Developers is looking to raise at least Rs 200 crore from private equity investors by December. The funds would help the New Delhi-based realtor achieve its target of slashing debt by 34% in the next two years.

The company has Rs 1,500 crore debt in its books at the end of FY10 . It intends to pay off Rs 520 crore by fiscal 2012.

Parsvnath is in talks with at least three private equity investors, including Red Fort Capital and SUN-Apollo.

The investors are likely to take a stake in a residential project of the developer.

The company may also look at offloading stake in its Delhi Metro Rail Corp (DMRC) projects.

The developer had entered into a contract with the DMRC to develop 13 shopping malls/ complexes at metro stations.
Another Rs 128 crore is expected to come by exiting stalled projects during the current fiscal.

The firm is seeking refunds of about Rs 25 crore from the Jharkhand government as a housing project in Ranchi could not be completed due to the state government’s inability to procure land.
It is also seeking Rs 19 crore from the Malerkotla project in Punjab by selling land. It has also written to the state government to surrender the film city project in Chandigarh for Rs 48 crore. Parsvnath is also looking to surrender the Mahim (in Mumbai) bus terminal project for Rs 8 crore.

Parsvnath chairman Pradeep Jain did not comment for the story, but sources familiar with the situation confirmed the developments to DNA.

The developer had over Rs 1,800 crore debt in FY09. Improved cash flows, a qualified institutional placement (QIP) of shares and some private equity deals helped the company reduce debt to Rs 1,500 crore in FY10.

Parsvnath’s average cost of borrowing, which is currently at 12.5%, is expected to go down by couple of hundred basis points (100 basis points make a percentage point) as it pays off more expensive debt. The debt equity ratio is also expected to drop to 0.4 by 2012 from 0.66 now.

In the last fiscal, Parsvnath raised Rs 115 crore from Red Fort Capital in two tranches, Rs 168 crore through a QIP and Rs 75 crore from SUN-Apollo.

It received Rs 207 crore by exiting stalled projects.