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Piramal Capital offloads Rs 2,000-cr loan exposure in Lodha to Goldman Sachs unit
Live Mint  |  May 29, 2019

Tanya Thomas & Deborshi Chaki Mumbai
  • The move comes after Fitch Ratings downgraded Lodha Developers to negative from stable on 7 May
  • India Ratings had also put Lodha on rating watch negative over a potential delay in company’s planned sale of London assets

 

Piramal Capital and Housing Finance Ltd has sold its Rs 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, Rs 1,000 crore (of loan exposure) will be reduced in this quarter. We have also received prepayments and repayments of Rs 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 Rs 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 Rs 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 Rs 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 Rs 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.