Arvind SmartSpaces Limited (ASL) and HDFC Capital Advisors (HDFC) have partnered to create a separate platform for the residential development.
Key points to note –
- Subject platform will be a 100% subsidiary of ASL.
- Total fund infusion is envisaged at Rs 900 crore in multiple tranches as and when required
- Rs 300 crore from ASL as equity/ preference shares/ convertible debentures or any other instrument as mutually agreed
- Rs 600 crore from HDFC as Optionally Convertible Debentures
- The funds will be utilised for acquisition of new projects for residential developments in the cities of Ahmedabad, Bangalore, Pune and MMR.
- ASL’s role will be of execution and HDFC’s of investment management.
- The Platform is estimating to create an overall revenue potential of Rs. 4000-5000 cr excluding the reinvestment potential.
Rationale for the transaction/ partnership
This is a typical HDFC (fund) kind of investment where it takes exposure in specific projects as it finds suitable and circumferences it’s investment from larger corporate level risks.
To ASL, it provides a significant funding source and hence enlarges it’s scale of operations.
Does it make ASL as a stock exciting
Ideally it does as the new platform would be a 100% subsidiary.
HDFC’s presence will surely bring discipline in the operations of the platform that in turn adds to the overall comfort.