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Bharat Infratech: “Lehman Fall Will Have No Impact”
Posted by Pradeep Sadanapalli | September 22, 2008 | 1,818 views
(3 votes, average: 4.67 out of 5)
Loading ...Bharat Infratech, the Hyderabad-based real estate developer has said the recent developments in the financial markets regarding Lehman Brothers in US would not impact their ongoing projects, including its flagship Iconia.
In a statement, Bharat Infra said “We are an FDI-compliant company with private equity funds invested in our projects. Currently our projects are already fully funded by equity funds managed by Lehman Brothers, Tiger Global Management, and Mr A. Sitarama Raju and his group.”
The investment of Lehman Brothers is from LBREP II, which is a third party equity $2.4-billion, 10-year fund, raised by Lehman in August 2005.
Further, investments in Bharat are governed by the laws for FDI investment and the lock-in period stipulated therein, the statement said.
Bharat Infratech, formed in 2006, has firmed up plans to implement 10 large realty projects — six in Hyderabad and four in Visakhapatnam. It has already built up a land bank of 700 acres in these two fast growing cities.
The company’s flagship project, Iconia, which will have 18 towers and a built-up area of 3.85 million sq ft has already made progress in Kondapur area of Hyderabad.
The total project on a 21-acre campus has been conceptualised by Atkins of UK, designed by DWP of Thailand, landscaped by SCI of Singapore, while Jones Lang Le Salle Meghraj is undertaking the facility’s management, the company said.
NOTE: Further comments and discussiona are welcome on this topic. Many Real Estate projects are dependant upon FDI.
SOURCES:
Business Line
Topics: Finance, Construction, Business News, Real Estate |
6 Responses to “Bharat Infratech: “Lehman Fall Will Have No Impact””
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September 22nd, 2008 at 5:10 am
Doesn’t Lehman Brothers have the right to freeze the LBREP II third party equity during the Bankruptcy period? Typically, Bankruptcy supercedes any FDI lock-in-period. Those who claim that the project is completely funded, does this mean that the money has been deposited in their account? I don’t think so.
September 22nd, 2008 at 6:22 pm
Hi kpondug,
The points you raised are perfectly valid points. I have no much idea regarding this.
Lehman had also invested heavily in DLF, Unitech, IT Park from Peninsula, and few other SEZs.
I do not know about the conditions of Lock-in period, but I heard that whicever developers had already received the FDI fund, they are safe. But if they had not already received fund, they are in problem.
Unitech MD Sanjay Chandra said that his company had already received funds. So, the company won’t get impacted by Lehman’s bankruptcy.
Analysts argue that the lock-in period in case of bankruptcy may not hold. So, if Bharat has not already received the funds, it is in a problem.
The info is from This Article.
Did any one try to check with Bharat Infratech directly if they can support their claim through any written evidence etc, and if they had already the funds from Lehman?
Let’s see if any other members comment on this.
-Pradeep
September 23rd, 2008 at 11:32 am
Hi not sure of the legalities but thought I will just share my views.
Now its a given thing that the real estate will go down and all the developments on the outskirts with regards to malls, IT Parks, Flats will face a uphill task to complete. The buyers too will be scarce.
This is also the churn period for all the companies, with money coming in being tough, the viability of projects being completed or completed on time should not be taken as granted. The smaller companies and the independent builders will face the max brunt.
If anyone is planning to buy, I would suggest them to go for already completed projects rather than buy into or book at the project start level.
If anyone is looking at Dollar rate it has zoomed up very much (from around 40.50 levels to 46 levels in the last few months) one of the possible reason is that all the FDI investment is being taken back and the rush to sell that amount and to convert into dollars is what is making dollar to go up. This clearly points that the talk of realty firms (apart from others)that money is not being taken out is not correct. So the bottom line is that all firms big small will be effected.
Ofcourse this is not the end of the world so things will go as planned but will take more time. May be another two years things will be back to normal, less hype more substance.
Only my view
Correct me where it is needed. Cheers.
September 23rd, 2008 at 12:31 pm
Thank you Surender, you brought up a good point.
We need to be little extra careful while investing in this down market. We should not get carried over by ‘Big Advertisements’ or ‘Big Hype’. We need to evaluate whether a particular developer has the potential to complete so-and-so project or not as promised. No need to hurry at this time.
The progress of many projects which have already started will definitely slowdown, and the delivery period will extend a lot, I guess. It all depends on the financial muscle of a particular developer.
I will be interested to know the status of “Wave Rock” at Gachibowli, “Techno City” at Tellapur which have the funding from US-based Tishman Speyers, Sunway Projects, Aparna’s project which JP Morgan planned to fund etc etc.
October 1st, 2008 at 10:01 pm
If I were Bharat, I would issue the same statement as they did. This is management coming out and saying to investors and all those who have booked the apartments by paying advance that there is no trouble ahead. I have heard one reputable analyst mention that the initial phase of money has come in. All other future money will be frozen. As a result, Bharat would have to come up with additional cash or scale down their construction towers.
Another concern is that the price of these units, for ex: Iconia is very high. In this environment of high interest rates, job losses in the US, lack of credit, the buying process will slow down.
I personally would want the project to succeed. My land is next to their development and if these towers come up, the land value goes up. Good luck guys.
October 3rd, 2008 at 1:57 pm
Hi
In the current senario where there is uncertainity in funding these big projects,higher interest rates,high cost,job cuts in US the buying process has slowed down considerably. Most of the big and small companies are scaling down or going slow on their projects for now.
It is advisable to be cautious and wait till the situation is improved.