Global alternative investment firm Varde Partners has lent about Rs 750 crore to Hyderabad-based developer Phoenix Group through a mezannine debt transaction, said sources in the know.
Mezz debt is a junior debt, which gets paid only after senior lender has been settled completely.
The money would be used towards construction, sources said , adding that the developer is converting a special economic zone project into non SEZ and banks are not allowed to lend if purpose of loan is changed, hence it is borrowing from a private lender, they said.
When contacted , Gopikrishna Patibanda, managing director of Phoenix Group declined to comment..A mail sent to Varde Partners did not elicit any response.
Normally Varde lends at a rate of over 20% but sources defended it saying “It’s a timely use of capital for Phoenix in the current scenario.”
“They have borrowed from Varde in the past as well and they have got good comfort and rapport with them,” sources said .
In early 2021, Varde Partners extended a $155 million (Rs 1131 crore)senior financing facility for two office projects being developed by Phoenix Group in the Gachibowli financial district in Hyderabad.
The $155 million was to be used for refinance and fund completion of over 2.5 million sq ft across the two Grade A developments owned by Phoenix Group.
Early this year, Singaporean sovereign fund GIC bought a IT-SEZ spread over 1.1 million sq ft in Hyderabad’s Gachibowli area from the Phoenix Group for Rs 1,050 crore, media reports said. The entire development, Phoenix Aquilla, has two towers spread over 1.8 million sq ft, and the first tower with 700,000 sq ft was completed and leased.
Global special situations funds such as Varde, Oaktree, PAG, SSG Capital and others have stepped up lending to property developers here after the NBFC credit crunch in 2018 post which NBFCs reduced lending to developers to clean up their balance sheets and shore up liquidity.
US based Varde Partners is betting big on India. Late last year, it’s managing director Sandeep Chandak said the firm is looking to invest $800 million to $1 billion across six to eight deals.
Last year, It lent Rs 440 crore to Omaxe and lent Rs 400 crore ro Chennai based Casagrand to buy land parcels.
In addition, Varde Partners acquired a 15% stake In Reliance Power for Rs 933 crore. Reliance Power is part of Anil Ambani ADAG group. Varde had infused nearly Rs 550 crore into Reliance Infrastructure.
Varde has already deployed over $3 billion across 20 different transactions in India in the last four years, reports said last year. Varde was founded in the year 1993 and has since invested over $95 billion across regions like North America, Europe and the Asia Pacific.