Adarsh Developers Achieves Major Financial Turnaround by Repaying INR 750 Cr Edelweiss Debt

Adarsh Developers, a prominent real estate firm, has taken a significant step towards financial stability by repaying a ₹750 crore structured finance facility obtained from Edelweiss Alternative Asset Advisors in 2022. This repayment, facilitated through operational cash flow and more favorable refinancing from banks, has enabled the Bengaluru-based company to reduce its cost of funds by an impressive 8-9 percentage points.

Initial High-Interest Funding for Project Revival

The initial funding from Edelweiss, which carried an interest rate exceeding 20%, was crucial for reviving Adarsh Developers' residential projects and generating much-needed liquidity. Edelweiss extended the loan in two tranches, with the first tranche amounting to ₹450 crore. Adarsh Developers utilized part of the ₹1,900 crore raised from a land sale to Mapletree Investments earlier this year to repay this amount while continuing to finance the remaining debt.

High Returns for Edelweiss Investors

"When Edelweiss first lent in 2022, Adarsh was facing significant cash flow challenges," stated a source familiar with the situation. The successful turnaround has resulted in substantial returns for Edelweiss, with the private credit fund generating yields of 20-25%, benefiting its investors.

Refinancing Strategy and Improved Financial Position

Adarsh Developers recently secured ₹385 crore in financing from two banks, finalizing the deal last Thursday. The company has refinanced the Edelweiss loan at a significantly lower interest rate of 12-13%. According to BM Jayeshankar, chairman of the Adarsh Group of Companies, "Adarsh is now in a favorable financial position and is planning to primarily focus on residential development, with some emphasis on commercial development."

Land Sale and Debt Reduction Strategy

As part of its strategic debt reduction efforts, Adarsh Developers sold 41 acres of land in Bengaluru to Singapore-based private equity fund Mapletree Investments earlier this year for over ₹1,900 crore. This sale played a pivotal role in the company’s ability to repay ₹1,270 crore of debt over the past two years through a combination of fundraising and improved cash flow.

Shreshta Infra Projects and Additional Funding

In addition to these efforts, Edelweiss Special Opportunities Fund extended a ₹350 crore debt facility to Bengaluru’s Shreshta Infra Projects, a special purpose vehicle of Adarsh Developers. The funds were used to complete two projects and repay debt to Oaktree Capital. This facility included non-convertible bonds at a 20.5% interest rate with a 41-month and 24-day tenor.

Indemnification Statement

The information provided in this article is based on publicly available sources and statements from individuals familiar with the situation. While every effort has been made to ensure accuracy, readers are advised to verify details independently. The author and publisher are not responsible for any errors or omissions.