Parsvnath Developers is looking to raise Rs 242 crore by the March-end by diluting more stake to private equity (PE) investors at the project level, a senior company official said. “We are in constant talks with investors for our funding requirements. I am reasonably confident that we would be able to raise Rs 242 crore by end of this fiscal,” Parsvnath chairman Pradeep Jain told DNA Money. So far this fiscal, the developer has raised Rs 115 crore from Red Fort Capital in two tranches, Rs 168 crore through a qualified institutional placement (QIP), and Rs 75 crore from SUN-Apollo, a real estate private equity fund.

Jain said the company is not looking to launch any new project and would concentrate on delivering the existing 42 million sq ft of properties in the next 24 months. Of these, 90% are in the residential segment. It has already received revenue of Rs 3,500 crore from these projects and expects Rs 3,500 crore more during completion and possession. “In the next two years we will invest Rs 1,100-1,200 crore for construction of these projects, which would come from a combination of customer advances and private equity investments. We are not looking to raise any additional debt to fund our expansion plans,” Jain added.

The company has net debt of less than Rs 1,500 crore, which is expected to go down to Rs 1,100 crore by end of current fiscal and to Rs 400-500 crore by the next fiscal. Any new debt raised would be used to retire old and more expensive debt.

Parsvnath’s average cost of borrowing is currently at 13.5%, which is expected to go down by couple of hundred basis points, and the debt equity ratio stands at 0.75. “I expect 2010 to be slightly better than 2009 and margins would remain at healthy levels of 25-30%,” Jain added. In its second quarter results, Parsvnath posted a profit of Rs 62 crore on sales of Rs 200 crore by selling 400-500 residential units compared with 70-80 units sold in the first quarter.

Source: http://www.indianrealtynews.com

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