Hiranandani group entity NMDC Data Centre Private Limited (NMDC) will raise up to Rs 3,100 crore through debentures for capital expenditure on digital infrastructure and retire old loans etc.
Rating agency ICRA has assigned “AA-” rating for the proposed non-convertible debentures (NCDs). The rating NMDC factors in the strong track record of the Hiranandani Group in the real estate sector, including the construction of large-scale IT buildings and data centers (DC).
During 2012-2022, the Group constructed four DCs for NTT Global Data Centers & Cloud Infrastructure India Private Limited (NTT) and forayed into DC development and management business in 2019.
The funds will be utilised towards repayment of outstanding construction finance and lease rental discounting (LRD) loans, funding of residual cost towards digital infrastructure and creation of an interest service reserve account (ISRA). The residual capex towards digital infrastructure is pegged at Rs 1,009 crore.
The debt structure of the proposed NCD issuance has elements like a bullet repayment at the end of four years. The investors will also have a call option available at the end of 36/42 months from the date of allotment.
The company will maintain Rs 150 crore in an interest service reserve account (ISRA). There will be a cap on raising additional debt.
ICRA said apart from ISRA, the company is likely to maintain a healthy unencumbered cash balance of Rs 300-325 crore by the end of FY23. This is more than one year’s interest expenses and may be utilised towards working capital requirements/interest obligations till operations are stabilised.
These strengths are, however, partially offset by moderate market risk, given that only 40 per cent of the total capacity of tower 1 was leased as of September 2022.
This risk is exacerbated due to NMDC’s focus on the more profitable managed and cloud services, which requires tie-ups with a higher number of clients. The company faces heightened competition from large DC additions from established players such as NTT, CtrlS Data centers and STT Global Data centers.