Adarsh Developers Cuts Debt, Improves Finances

3 Sep 2024 , 01:19 PM

Adarsh Developers is on the verge of a financial turnaround after repaying a Rs 750 crore structured finance credit raised from Edelweiss Alternative Asset Advisors in 2022.

The payback, combined with operational cash flow and lower-cost borrowing from banks, has reduced the Bengaluru-based company’s cost of funds by 8-9 percentage points. Edelweiss’ initial financing, which was raised at more than 20%, was utilised to revive residential projects and generate liquidity.

Edelweiss had lent the money in two tranches, the first of which was Rs 450 crore. While Adarsh Developers used a portion of the Rs 1,900 crore it received from a land sale to Mapletree Investments earlier this year to repay Rs 450 crore, it continued to fund the remaining debt.

“When Edelweiss first lent in 2022, Adarsh was facing significant cash flow challenges,” a person familiar with the situation told ET.

Adarsh Developers raised money from Edelweiss in 2022 for three projects comprising 2.5 million square feet and 900 plots in Bengaluru. Adarsh Savarna, Adarsh Wellin Park, and Adarsh Lakefront are now under construction and are expected to be finished by the end of 2028.

Adarsh Developers borrowed Rs 385 crore from two banks, with the transaction completed on Thursday, according to two persons familiar with the matter who talked to ET. The Edelweiss loan was refinanced at 12-13%.

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