Top Europeon fund may invest Rs 300 cr in Sobha

Redevco, one of Europe’s largest real estate investment and development firms, with a $10 billion portfolio, is understood to be looking at investing around Rs 300 crore in various projects of Bangalore-based Sobha Developers.

Redevco, part of the diversified Cafro Holdings, which is into private equity, retail, financial services and renewable energy, in addition to real estate development, set up office in India in late 2008. If the discussions with Sobha fructify, it will be its first investment in India.

Investment banking sources indicated that Redevco has had initial discussions with the management of Sobha Developers, which is mired in debt like many of its peers. The investment, if it materialises, is expected to be tied up by September 2009, they say.

Private equity investments into Indian real estate have been slowing over the past three quarters and this deal is expected to be a major one. While Redevco said it had nothing to comment, Sobha has been maintaining that it is in talks with various funds and nothing has been finalised.

Over the past two quarters, Sobha has been aggressively looking at three options to reduce its debt burden of close to Rs 1,900 crore, a leverage of 1.6 times.

The company, which has Infosys as one of its major clients, is looking to raise around Rs 850 cr by selling around 200 acres of its 3,000 acre land bank, offloading up to 49 per cent stake through special purpose vehicles and to offload up to 25 per cent stake at the enterprise level.

Sobha is understood to have identified around 150 acres of land on which projects can be implemented through special purpose vehicles by divesting stakes.

The company is also engaged with around 12 banks and financial institutions to restructure around Rs 850 cr of debt that will be due for payment during the next 18 months.

Banking sources indicate Sobha has been able to get a nod for a part of that sum and talks are also on with mutual funds to roll over Rs 350 cr of debt.