J P Morgan provides $70 million debt fund to Puravankara

Written By Unknown on Jumat, 25 Januari 2013 | 22.23

BANGALORE: An investment arm of J P Morgan has extended about $70 million (Rs 375 crore) funding to listed Bangalore developer Puravankara Projects for developing a 4.2 million sqft premium residential project in Chennai, said people briefed on the matter.

The funding from Wall Street's most profitable bank is in the form of senior debt to a special purpose vehicle executing the project, with an assured return of 18%. The deal was completed in recent weeks.

Senior management officials at Puravankara Projects declined to comment for the story, saying that they were in a silent period as their third quarter financial results are due next week.

The project, Purva Windermere, is coming up on a 54-acre land parcel along Chennai's Old Mahabalipuram Road. Financial investors, more specifically private equity firms, have increasingly opted for debt financing through their NBFCs or structured equity deals in real estate investments. This insulates them from execution, marketing and demand-supply risks.

JP Morgan, through its proprietary and asset management arms, has been a prolific investor in Indian real estate and infrastructure sectors, though it has turned cautious on the former in recent times.

In the commercial real estate market, which tends to produce stable rent yielding assets, investors prefer to go for an outright buy. In the last two years, PE giant Blackstone has invested $950 million in India, picking up 25 million sqft of commercial and residential developments.


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