In a landmark development, Deutsche Bank and the Lodha Group have successfully restructured one of the biggest real estate FDI transactions. Lodha Developers has paid Rs 2,500 crore, giving Deutsche a 55% return on its Rs 1,600 crore investment. CNBC-TV18's Priyanka Ghosh reports.
This transaction happened in 2007. It was made through compulsorily convertible debentures via a subsidiary in the Lodha group.
Industry experts say Deutsche has had to scale down its expectations of returns over the past five years because since markets have deteriorated 2007 onwards.
For Lodha, it has concluded a much speculated transaction. It started repaying this debt in 2010. It has taken out Rs 1720 crore of its cash accruals, as well as it has taken debt of about Rs 825 crore and that's how its has been able to repay Deutsche as well as give it Rs 900 crore kind of upside.
The current debt level of Lodha Developers currently stands at about Rs 3000 crore.
The company is going to do close to Rs 6,000 crore of sales for this financial year, in line with what we did last year and generate about Rs 1500 crore of free cash flow, informs managing director Abhisheck Lodha. "Our plan for the next financial year is to look at about a Rs1000 crores of new land acquisitions," he said.
"We have no immediate thoughts about the IPO, like I mentioned between 2007 and 2009, when we were in the investment mode we looked at going public," he told CNBC-TV18.
