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The Embassy Group, a prominent real estate developer, plans to raise INR 1,600 crore through zero-coupon bonds to fund new projects, refinance existing debt, and acquire a 5% stake in WeWork India. The fundraising will be facilitated by its subsidiary, Serenesummit Realty, in collaboration with 360 One. The bonds are structured to provide potential returns linked to WeWork India's anticipated IPO, expected in 12-18 months. Key securities include a 52.4% stake in WeWork India, guarantees from Embassy entities, and other assets. Despite challenges with credit downgrades in 2024, the group remains focused on growth through strategic investments and partnerships.
The Embassy Group, a leading real estate developer, has announced plans to raise INR 1,600 crore via zero-coupon bonds. This move aims to finance new projects, refinance existing debt, and facilitate the acquisition of a 5% stake in WeWork India from WeWork Global. The initiative will be carried out through Serenesummit Realty, a closely held subsidiary, with funding talks underway with 360 One. Advertisement
The bond structure is designed to offer returns linked to WeWork India's upcoming IPO, with a potential internal rate of return (IRR) of up to 16%, factoring in a prepayment penalty. Security measures include an exclusive pledge of 52.4% of WeWork India shares held by Embassy BuildCon LLP, corporate guarantees, and a personal guarantee from Jitendra Virwani, Embassy Group's founder.
With a three-year tenure, the bond repayment is planned as a bullet payment at maturity. WeWork India's IPO, expected within the next 12-18 months, will significantly influence the debt repayment strategy. Additional securities include shares of Equinox India Developments Ltd. and a secondary charge on Embassy Office Parks REIT units.
The company is initially targeting a debt of INR 1,575 crore, increasing to INR 2,065 crore on put. The primary collateral is valued at INR 4,796 crore, ensuring a security cover of approximately 3.0x. However, the group has faced credit downgrades in 2024, reflecting financial strains on some of its entities.
Embassy REIT is India's first publicly listed Real Estate Investment Trust. Embassy REIT owns and operates a 51.1 million square feet portfolio of 14 office parks in Bengaluru, Mumbai, Pune, the National Capital Region (NCR) and Chennai.
Embassy REIT's portfolio comprises 38.4 million square feet of completed operating area. The portfolio also comprises strategic amenities, including four operational business hotels, two under-construction hotels, and a 100 MW solar park supplying renewable energy to tenants.
Founded in 1993, the Embassy Group operates across residential, commercial, and industrial real estate in India and internationally, partnering with global investors like Blackstone and Warburg Pincus.
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