Money Matters Financial Services, whose managing director and two top executives were arrested by the Central Bureau of Investigation (CBI) in relation to real estate scam, did a debt syndication for at least four real estate companies to the tune of Rs 5,300 crore since April 2008, an analyst report said today.
Mumbai-based DB Realty did a loan syndication of Rs 188 crore in March 2010, Noida-based Jaypee Infratech raised around Rs 3,700 crore in January this year, Mumbai-based HDIL raised Rs 850 crore in June 2008 and Delhi-based Emaar MGF another Rs 600 crore in April 2008, a report from Ambit Capital said, citing the annual report and website of Money Matters.
In an emailed response, N Shridhar, group director (strategy & finance) said D B Realty applied for debt syndication of Rs 200 crore in December 2009 that was sanctioned in January 2010 and disbursed in March 2010.
HDIL, the country’s third largest developer, raised the money through non-convertible debentures from Life Insurance Corporation of India and others banks through Money Matters. It is not known from whom other realty developers raised money.
Property developers such as Anant Raj, HDIL, Indiabulls Real Estate and others have raised loans from banks such as Bank of India, Central Bank and Pujab National Bank whose officials have involved in the scam, the report said.
Mumbai-based Orbit Corporation has a sanction of Rs 250 crore from LIC Housing Finance, which is in the centre of realty scam. Out of this, Orbit has availed Rs 150 crore, a company executive said.
Ambit said debt refinancing/restructuring would go through increased scrutiny and required asset security would go up. “This will result in delay in refinancing and push up the cost of borrowing,” it said.
ICICI Direct.com has urged its clients to lower their exposure to the realty stocks by 50 per cent in the aftermath of the scam.
But some brokerages like CLSA said the perceived concentration of risk in real estate is not as high as perceived.
Quoting FY 2010 annual report of Money Matters, CLSA said Money Matters' 30 per cent of the debt syndication deals were in infrastructure sector, 23 per cent in power sector and remaining to real estate and financial institutions. In a notice to stock exchanges, Money Matters said the company is fully co-operating with the investigative agency and in the legal proceedings. The company has called a board meeting on Friday to discuss the matter in detail and to decide upon the further course of action.