Orris raises $49M from IndoStar

Gurgaon-based real estate developer Orris Infrastructure has raised Rs 325 crore ($49 million) from non-banking finance company (NBFC) IndoStar Capital Finance Ltd in the form of non-convertible debentures (NCDs), a top company executive told VCCircle.

The proceeds will be used to pre-pay debt from Xander Finance (Rs 170 crore) and Religare Credit Opportunities Fund (Rs 45 crore). It will use the rest of the capital (Rs 110 crore) for construction of its ongoing projects.

Religare Credit Opportunities Fund had put in money in 2014 while Xander had invested in 2013.

Speaking to VCCircle, Amit Gupta, managing director, Orris, said, “We will use a significant part of the money to pay off debt and the rest will go as working capital across our 10 ongoing projects. We are also planning to come up with two more group housing projects in the near future and are exploring joint venture opportunities for the same.”

This marks the first known deal of IndoStar in North India. People familiar with the firm’s plans say it has been looking to foray into the region and is expected to seal more deals going forward.

Property consultant Knight Frank advised the developer on the transaction.

With presence across residential and commercial construction, the developer has residential projects in Noida and Gurgaon with a major exposure in the Gurgaon realty market.

The development comes at a time when the realty market of Delhi NCR is worst hit by a slowdown. In a tough market condition, developers are increasingly raising debt funding to replace high-cost capital with low cost ones.

In the first quarter of FY2016, the realty market saw absorption of 72.3 million sq ft of residential property as against 75.6 million in the same period a year ago. On an yearly basis, five out of the top eight major cities saw sales going down with the biggest realty market by volumes Delhi NCR seeing the sharpest drop at (-)14 per cent, according to real estate research firm Liases Foras.

At the national level, property demand continued its downhill ride with sales declining 4 per cent in the first quarter of FY16 over Q1 last year.

As for the funding activity in the region, NCR has seen some activity mostly structured as debt of late. VCCircle reported Edelweiss invested Rs 200 crore in Ghaziabad-based developer Saya Homes.

Noida-bsed realtor ATS Greens is in talks with Piramal Fund Management to raise as much as Rs 450 crore across two projects.