India: Carnival Group buys L&T’s commercial real estate project in Chandigarh for $275m

Photo: Priyanka Parshar/Mint

Carnival Group, promoted by Shrikant Bhasi, is on a buying spree.

Mumbai-based Carnival Group on Wednesday agreed to buy the commercial real estate projects of Larsen and Toubro Ltd (L&T) in Chandigarh for $275 million (Rs.1,785 crore).

This commercial real estate project of India’s largest engineering and construction firm includes the Elante Mall, Hyatt hotel and office premises with a central courtyard.

“This acquisition is a part of asset creation for the group as an investment portfolio. This acquisition will help us to further expand our capabilities and allow us to make inroads into newer markets. This project will be operated as a separate unit and will be led by its current India-based management team,” said Bhasi, chairman of Carnival Group.

Last month, Carnival Group had acquired Leela Infopark at Technopark in Thiruvananthapuram for Rs.142 crore. It was the second such acquisition by the Carnival Group, which took over the IT infrastructure of Leela Group in Kochi in July 2014 for Rs.280 crore.

In the same month, Carnival Cinemas Ltd announced the completion of the acquisition of multiplexes businesses from Reliance MediaWorks, part of Anil Ambani group, forRs.700 crore.

There is more in store.

Earlier this year, Carnival Group had acquired Glitz Cinemas, which is a part of Capital 18, a subsidiary of Mukesh Ambani’s Network 18 Media and Investments Ltd.

In July 2014, Carnival Group acquired HDIL’s Broadway forRs.110 crore.

“This project has got a good rental yield.” A.C. Dinesh, director of finance, Carnival Group, said referring to the Chandigarh deal.

This property has Elante mall with its retail space of over 1.5 million.sq. ft., the largest in Chandigarh. Elante has an entertainment zone with multiplex and food court that caters to its customers spread across 20 acres.

L&T’s sale of its non-core assets comes at a time when Indian companies, especially infrastructure developers, are selling assets.

In 2014-15, the total consolidated debt of L&T stood atRs.90,698.61 crore.

Indian companies will continue with such sales to deleverage their balance sheets as cash flows are not happening at this point of time, said Ajay Garg, managing director at domestic investment bank Equirus Capital Pvt Ltd.

“The asset sales are expected to continue. And it is buyers’ market,” Garg said.

A slump in economic growth, declining consumer demand, delays in securing statutory approvals and non-completion of land acquisition have stalled dozens of infrastructure projects, including highways and power plants, in India in recent years.

That has squeezed corporate cash flows, making it difficult for developers to repay debt, and led to a pile-up of bad loans in the banking system.

Early this month, Gammon Infrastructure Projects Ltd sold nine projects—six roads and three power plants to BIF India Holdings Pte Ltd—an entity controlled by Canada-based Brookfield Asset Management Inc. and Core Infrastructure India Fund Pte Ltd, an India-focused infrastructure fund managed by the Singapore branch of Kotak Mahindra (UK) Ltd.

On 8 September, Jaiprakash Power Ventures Ltd said it had concluded the sale of two hydropower projects to JSW Energy Ltd in a deal valued at Rs.9,275 crore, less than the originally agreed Rs.9,700 crore. The company said it has also signed an in-principle agreement with JSW Energy for the sale of a thermal power plant.

These transactions could mark an acceleration of deal-making in the Indian infrastructure sector, including power plants and roads.

Sellers are on a weak wicket in negotiating deals as a number of them have high debt and limited options for further fund-raising. Banks, which have so far kept these companies afloat, are also getting tough as they try and clean up their own books, leaving some companies with no choice but to sell assets.

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This article was first published on Livemint.com

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.