Adarsh Developers is nearing a financial turnaround after repaying a INR 750 crore structured finance facility from Edelweiss Alternative Asset Advisors, initially raised in 2022 at over 20% interest. This repayment, supported by operational cash flow and cheaper bank refinancing, has reduced the company's cost of funds by 8-9 percentage points. Adarsh used part of INR 1,900 crore from a land sale to Mapletree Investments to settle a portion of the debt. The firm has also repaid INR 1,270 crore of debt over the last two years and continues to focus on residential and some commercial projects.
Adarsh Developers, a real estate firm, is nearing a financial turnaround following the repayment of a INR 750 crore structured finance facility from Edelweiss Alternative Asset Advisors that was secured in 2022. This repayment, supported by operational cash flow and more affordable refinancing from banks, has enabled the Bengaluru-based company to lower its cost of funds by 8-9 percentage points. The initial high-cost funding from Edelweiss, which was over 20%, was utilised to revive residential projects and enhance liquidity. Edelweiss provided the loan in two segments, with INR 450 crore allocated in the first instalment. Adarsh Developers repaid this INR 450 crore using a portion of the INR 1,900 crore raised from the sale of land to Mapletree Investments earlier this year. The company is now continuing to manage the remaining portion of the debt.
According to an insider, when Edelweiss initially provided the loan in 2022, Adarsh Developers was struggling with substantial cash flow difficulties. The subsequent turnaround has resulted in Edelweiss achieving returns of 20-25%, which has generated high yields for investors in their private credit fund. In 2022, Adarsh Developers secured funds from Edelweiss to support three projects including a total of 2.5 million square feet and 900 plots in Bengaluru. The projects, named Adarsh Savarna, Adarsh Wellin Park, and Adarsh Lakefront, are currently under construction and are expected to be completed by the end of 2028. Recently, Adarsh Developers also borrowed INR 385 crore from two banks, with the deal being finalised on Thursday, according to two sources familiar with the matter. The loan from Edelweiss has been refinanced at an interest rate of 12-13%.
BM Jayeshankar, chairman and managing director of the Adarsh Group of Companies, stated that the company has initiated several projects that have boosted cash flow and sold land, greatly improving their financial status. He mentioned that Adarsh is now in a strong financial position and intends to concentrate mainly on residential development, with some attention to commercial projects. An Edelweiss spokesperson chose not to comment.
Over the past two years, Adarsh Developers has repaid INR 1,270 crore of debt by utilising improved cash flow and successful fundraising efforts. As part of its debt reduction strategy, earlier this year, the company sold 41 acres in Bengaluru to Singapore-based private equity firm Mapletree Investments for more than INR 1,900 crore. This year, Edelweiss Special Opportunities Fund provided a INR 350 crore debt facility to Shreshta Infra Projects, a special purpose vehicle of Adarsh Developers based in Bengaluru. Shreshta Infra utilised these funds to complete two projects and settle its debt with Oaktree Capital. The facility was structured as non-convertible bonds with an annual interest rate of 20.5% and a tenure of 41 months and 24 days.
Adarsh Developers' recent financial strategy signals a significant recovery, highlighted by the repayment of a INR 750 crore loan from Edelweiss and a strategic land sale to Mapletree Investments. The company's improved cash flow and successful refinancing efforts have substantially reduced its cost of funds. With ongoing projects like Adarsh Savarna, Adarsh Wellin Park, and Adarsh Lakefront set to complete by 2028, and new debt arrangements including a INR 385 crore bank loan and a INR 350 crore facility to Shreshta Infra, Adarsh is prepared to focus on expanding its residential and commercial development efforts.
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