India: Piramal Capital offloads $287m loan exposure in Lodha to Goldman unit

Photo: Bloomberg

Piramal Capital and Housing Finance Ltd has sold its ₹2,000-crore loan exposure to Mumbai-based Lodha Developers Ltd to a unit of Goldman Sachs, two people aware of the matter said.

The financier aims to systematically bring down single-borrower exposure to Lodha, a Piramal Capital spokesperson said, but did not mention the loan sale to Goldman.

“In line with that focus, ₹1,000 crore (of loan exposure) will be reduced in this quarter. We have also received prepayments and repayments of ₹200 crore. Piramal Enterprises (Piramal Capital’s holding company) remains committed to deliver improved performance, strengthen our industry leadership and consistently create long term value for our stakeholders,” the spokesperson said in an email

A Goldman Sachs spokesperson did not comment, while an email sent to Lodha remained unanswered until press time.

On 7 May, Fitch Ratings revised its outlook for Lodha Developers from stable to negative, following a weak liquidity position and concern that the company’s cash flows will be insufficient to repay its ₹690 crore debt due in March 2020. Earlier in April, Fitch’s domestic subsidiary, India Ratings, had put Lodha on rating watch negative over a potential delay in company’s planned sale of London assets.

In December 2018, Lodha announced its plans to sell 95% stake in its London assets for total equity value of ₹420 crore, which would result in the company focusing solely on domestic projects, located mainly in the Mumbai Metropolitan Region.

For the March 2019 quarter, Piramal Enterprises reported an 88% plunge in consolidated net profit to ₹456.24 crore.

The Ajay Piramal-led Piramal group has had long-standing relationships with both Lodha Developers and Goldman Sachs.

In February, Piramal Enterprises and Ivanhoé Cambridge, a real estate subsidiary of Canadian investor Caisse de Dépôt et Placement du Québec, invested ₹500 crore in a residential project, Palava City, being developed by Lodha near Mumbai. Goldman Sachs, along with Warburg Pincus, invested about $434 million in Piramal Realty, another group subsidiary, one of the largest PE investments in Indian realty.

A spate of rating downgrades in the past fortnight has stoked fears of another impending liquidity crisis in the non-banking financial companies sector, with a cascading effect on the broader markets that have been on a fragile road to recovery since the Infrastructure Leasing & Financial Services crisis surfaced last September.

This article was first published on livemint.com.

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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.