Latest news with #VärdePartners
Mint
4 days ago
- Business
- Mint
Andy Mukherjee: Foreign money has rushed in where local lenders fear to tread
India is a sizzling market for private credit, though some participants are wondering if in their eagerness to close deals, investors are shutting their eyes to risks, especially the legal minefields around collateral and bankruptcy. A decade ago, India's banks were struggling with the world's biggest load of soured corporate loans. At about $200 billion, the write-offs on that exposure have been large. Deposit-taking institutions that tried to recover the debt via insolvency proceedings have had to accept harsh haircuts. Traditional lenders are so scared by that experience that personal credit, which was less than half of banks' advances to industry 10 years ago, is now 1.5 times as large and growing nearly twice as fast. Credit demand and supply have changed in other ways, too. Large firms, traditionally the heaviest users of bank financing, seem the least interested in project finance. They are borrowing selectively to fund acquisitions and refinance existing debt rather than to create new capacity. Also Read: Finance in India has a new bogey called private credit Startups and their founders are far more eager to raise debt, though that's mostly because venture capital funds have become stingy. Initial public offerings are being delayed in a slowing economy, and equity valuations for many unlisted firms are cooling off. Non-bank financiers, too, are starved for funding. Banks have turned cautious about these firms' exposure to overleveraged households. This is a perfect scenario for non-traditional lenders—global insurers, asset managers and sovereign wealth funds—to fill in the void left by banks and pocket a cool 18-20% return. Värde Partners, Oaktree Capital Management and Davidson Kempner are among the most aggressive, though everyone from BlackRock to Allianz Global Investors is participating enthusiastically in the deal-making. Local players appear quite miffed. Even though they're in on many small loans, the foreign money deluge is cutting them out of marquee transactions. Domestic private-credit ventures, especially those affiliated with banks, are also keen to earn high rates of return on capital. But they're more interested in the return of capital. Some of them have struggled to raise funds because they aren't seen as bold enough. Also Read: Much more private credit will be needed to feed India's rapid economic expansion Their foreign rivals, meanwhile, lack neither capital nor courage. As a few prominent Mumbai financiers told me, overseas institutions may be mispricing the true credit risk, which won't end well. Greed may hurt foreign investors, who will then cry that it's hard to get repaid in India. Some already are. In 2021, US lenders gave $1.2 billion to Indian entrepreneur Byju Raveendran for his eponymous online education venture, then the country's most valuable startup. Now Byju's has collapsed and the money is largely gone. Creditors will be lucky to get even a few cents on the dollar from bankruptcy proceedings in India. And yet, Byju's is no longer a cautionary tale in a gung-ho market. Creditors are chasing special situations, such as a nephew who needs a hefty loan to buy out an uncle. The other opportunity is in restructuring. Last month, Shapoorji Pallonji Group, a real estate and construction conglomerate, raised $3.4 billion from Deutsche Bank and other investors to refinance previous high-cost debt. This deal, a new record for India's private-credit market, has raised eyebrows. Although repayment is due in three years, the yield on the zero-coupon bond is as high as 19.75%. The collateral is also tricky. The deal is reportedly backed by about $3.6 billion of real estate and investments in oil and gas. The crown jewel is a 9.2% stake in Tata Sons, valued at roughly $18.6 billion. Also Read: Shapoorji Pallonji Real Estate rejigs top deck, appoints dual CEOs But how will value from the holding company of Tata Group, whose listed units are worth $325 billion, ever be realized? Shares in privately held Tata Sons aren't freely transferable. That's the official position of the charitable trusts that are its majority shareholders. Maybe investors are betting that the trusts will eventually relent or that they will buy out Shapoorji, the largest minority shareholder. Neither outcome can be predicted with any degree of bold bet shines a light on the buccaneering spirit that has taken over India's nascent private-credit industry. Policymakers would want to see more risk-taking in creation of new assets. India's new central bank chief has slashed interest rates, reducing the repo rate by a more-than-expected half percentage point on Friday. He has also flooded the financial system with liquidity. But given the cloudy outlook for global trade and local consumption, corporate investment isn't India Inc's priority. Swapping assets among one another is. As for the money, there are enough private lenders willing to write checks of $100 million or more. And if they don't, someone else will. ©Bloomberg The author is a Bloomberg Opinion columnist covering industrial companies and financial services in Asia.
Business Journals
25-04-2025
- Business
- Business Journals
Belltown tower's new owner launches major renovation
The new owner selected Bayspring Real Estate Partners' San Francisco office to manage Bay Vista and the $1 million-plus capital program. The new owner of the circa-1982 Bay Vista tower in Belltown is making comprehensive capital improvements to the commercial and medical office component of the 22-story mixed-use tower at 2815 Second Ave. Minneapolis-based global investment company Värde Partners quietly acquired the asset last fall through a deed in lieu of foreclosure. Other Seattle assets, including the 40-story Fourth and Madison and two Union Station buildings once owned by the McCaw family, also have sold through under-the-radar transfers. Värde selected Bayspring Real Estate Partners' San Francisco office to manage Bay Vista and the $1 million-plus capital program, which includes enhancement of common areas, move-in-ready spec suites, and "a market-leading tenant improvement allowance program," the April 7 announcement states. DLR Group is designing the project. On Thursday, a project spokesperson said a general contractor has not yet been selected. Bayspring hired Brandon Burmeister, Leah Masson and Ellen Akopyan of Cushman & Wakefield to market the medical and office space for lease and Tom Graff of Ewing & Clark to lease the retail. Finding tenants for Class B assets like Bay Vista is challenging in this market where a major trend is flight to quality, when tenants ditch space for digs in newer buildings with better amenities. "Bay Vista is well-positioned to attract top-tier office and medical tenants with enhanced amenities, great views of Elliott Bay and flexible suite options for tenants of all sizes,' Burmeister said in a news release. Of the 120,000 square feet of commercial space in the building, 61,322 are available on a direct basis, according to Cushman, which declined to provide asking rates. While older and in Belltown, where the city's homeless crisis is visible, Bay Vista does have water views and is proximate to the Olympic Sculpture Park, Pike Place Market, Seattle Center and Waterfront Park. Deeds in lieu of foreclosure don't turn up in public records searches filtered by sales price because the transactions record at $0. This means the sellers don't pay the real estate excise tax — 3% of the sales price over $3.025 million. Unless you work at a title company, one has to look for "deeds lieu," as they're called. One of the region's highest-profile deed-in-lieu sales was Smith Tower. Others include 1800 Ninth, formerly home to Amazon, empty life science building 330 Yale and TwoPine, formerly the Broadacres Building. Public records show Des Moines, Iowa-based Principal Real Estate Investors acquired nine-story 605 Union Station and four-story 625 Union Station in August. The seller was an entity related to the Los Angeles County Employees Retirement Association, which bought the buildings from the McCaws in 2013 for $97 million. The deed-in-lieu sale of Fourth and Madison occurred in December 2023, with public records listing the T-C 4th & Madison LLC as the seller and the New York State Teachers' Retirement System the buyer. Largest real estate deals in King County in 2024 Sale price Rank Prior Rank Transaction date 1 1 Parkside Esterra Park - 11/01/2024 2 2 1165 Eastlake - 09/05/2024 3 3 Beaumont Apartments - 11/19/2024 View this list For more stories like this one, sign up for the Business Journal's free morning and afternoon daily newsletters or download our free app.
Bloomberg
14-03-2025
- Business
- Bloomberg
Lowell Lenders Push to Get Better Terms as Part of Debt Deal
The lenders to British debt collector Lowell are seeking better terms as part of a deal that would see the company extend its maturities and get fresh cash from its bondholders. The creditors exposed to a revolving credit facility want an improvement to some of the conditions put forward by the company, according to people familiar with the matter, who asked not to be identified because the process is confidential. They include banks, but also funds Alinor Capital and Värde Partners on a sub-participation basis, some of the people said.
