Brigade to raise Rs 900 cr

JP Morgan gets the mandate.

Brigade Enterprises, the Bangalore-based real estate developer, is looking to raise close to Rs 900 crore through the private equity route to expand its hospitality vertical as well as to develop a 120 acre township in Bangalore.

The Rs 500 crore publicly held company has mandated J P Morgan to raise the funds and it is expected to be raised at special purpose vehicle levels.

M R Jaishankar, CMD, Brigade Enterprises confirmed these plans adding that the funds are expected to be tied up by end of the fiscal. Brigade is embarking on building a total of 1,000 hotel rooms across Bangalore, Mysore, Kochi in addition to a few cities under its hospitality subsidiary. The company is also expected to use the funds to develop a 1.5 million square feet integrated township.

Brigade has completed 67 residential, commercial, retail and hospitality projects, covering over 6.74 million square feet of developable area and is gearing up to launch projects with developable area of 8 to 10 million square feet. The company is also set to join the budget housing bandwagon during 2010 and is looking to launch projects to build Rs 20-lakh per dwelling units in Bangalore and Mysore.

The company during April earlier this year commenced operations at its 4 Star 126 Keys Mercure Homestead Residences in Bangalore which is by a global hospitality chain Accor Group. Brigade also signed a MoU with Minor Group, Thailand (known for Anantara and ‘M’ Collection Brands) to manage the proposed Luxury Resort at Kerala.

Another hospitality project for the Sheraton Group in Bangalore is under construction and expected to commence operations during the year 2010. Brigade is also betting on proposed Special Economic Zone in Mangalore and Kochi, the approvals for which were got recently.

The private equity inflow into the Bangalore real estate market has been showing signs of some revival during the past couple of months after city-based developers including Prestige, Puravankara, Sobha Developers looking to raise funds through this route. A few builders in Bangalore have also been reporting an uptake in sales of residential units during August.

Brigade Enterprises, which has a land bank of 350 acres, has a debt of close to Rs 450 crore and is expected to add Rs 300 crore during this year from a credit line of Rs 700 crore. The company post the draw down of this additional Rs 300 crore will be leveraged close to 0.7 times.