Abhishek Lodha, the 34-year-old head of Mumbai’s biggest residential development company, is getting used to the limelight. In 2010, he made headlines for clinching the city’s costliest land deal, when he masterminded the Lodha Group’s purchase of a 25,000-sq-m plot in Wadala, central Mumbai, for Rs 4,050 crore.
Two years later, he was back in the news for buying a 17-acre mill in Worli from DLF for Rs 2,700 crore. In 2013, he widened his area of influence by buying McDonald House, formerly the Canadian High Commission in London, for Rs 3,000-plus crore. The property rests in the heart of Mayfair, overlooking London’s finest garden squares. And now, he’s bought a Rs 1,000-crore property at London’s Grosvenor Square.
At home, with over 35 million sq ft of development in Mumbai and a land bank estimated at 3,500 acres in Dombivilli, the Lodhas have become the undisputed maharajas of the finance capital’s real estate sector. It’s been a quick growth story.
Abhishek’s father Mangal Prabhat Lodha came to Mumbai from Jodhpur and set up Lodha Developers as recently as 1980. Mangal Prabhat’s father had been a lawyer before turning into a BJP politician, and the son too trod the same path. Today, he is known as the six-time BJP MLA from Malabar Hill and one of the richest men in politics with a declared net worth of Rs 68 crore in 2009.
His heir-apparent Abhishek completed his M.S. in industrial systems engineering, where he studied design and project management, and went on to work as a consultant with McKinsey & Co in Atlanta. That done, he returned to the family business to handle operations, marketing and strategy at the Lodha group.
His recent moves indicate the Georgia Tech graduate has London strongly in his crosshairs. His intent seems to be to convert the city’s commercial properties with marquee addresses into luxury residential apartments. If he succeeds, he would have managed to create two markets for two sets of similar high-end clients, those buying high-end apartments in Mumbai (from all over the world) and those with the appetite and financial means to invest in the booming London market. Says HDFC chairman Deepak Parekh: “Central London is a big market that attracts foreign investors from West Asia, the Russians and the Chinese who all have large sums of money at their disposal... Selling properties in London will not be an issue for the Lodha Group.”
All that the low-profile Abhishek, who lives in the family home in Malabar Hills with his father and brother Abhinandan (32), will say is: “Lodha plans to focus on London as one of our two main markets and we will continue to look for opportunities that come up in this market. We will serve London in the same manner that we serve Mumbai-with world-class products intended to serve all key markets.”
While keeping a low profile as individuals, the Lodhas have steadily built their brand among consumers by spending over Rs 40 crore in advertising.
Unlike DLF and Unitech, Lodha has not attempted to undertake a pan-Indian expansion. “They have stayed close to the knitting,” says Pranay Vakil, founder-chairman of Knight Frank. He attributes the group’s growth strategy and aggression to pursue a market like London to Abhishek. “A gutsy risk taker with a superb brain,” is how Vakil describes him.
Sanjay Dutt, chief of Cushman Wakefield, attributes the young Lodha’s impressive professionalism to his stint with McKinsey & Co in the US. “He is an unassuming, understated, no-nonsense kind of guy with an outstanding demonstration of commercial sense,” he concludes. Even KG Krishnamurthy, MD & CEO of HDFC Property Ventures, which has invested in several of Lodha’s projects, is all praise for the young tycoon. “Abhishek is hands-on, meticulous and frankly a bit of a workaholic. His decision making is very quick,” he notes.
The London foray has undoubtedly propelled the Group, and Abhishek, into the big league of Indian realty. Industry sources now compare him with the top three builders in the country, Niranjan Hiranandani, DLF’s Rajiv Singh and Ravi Raheja of Raheja Developers. Bankers marvel that the group has been able to achieve what it has without accessing the public markets to raise funding. A planned IPO of Rs 2,700 crore was shelved in 2010. What the Group has done is forge successful long-term relationships with private equity funds and big bankers like JP Morgan, Deutsche Bank, HDFC Ventures, ICICI Bank and State Bank of India, who have invested in projects and acted as lenders. There are talks of JP Morgan financing the London transactions but this could not be confirmed.
A banker who has invested nearly $200 million in Lodha’s Mumbai projects, says: “In the past five-six years, the Lodha empire has grown substantially.My guesse is that they have a net cash surplus of Rs 70 crore-Rs 80 crore a month.”
This translates to roughly Rs 1,000 crore a year. They borrow on those funds and lenders are willing as they see assured cash flows for the next five years.”
But the reality check in realty is delivery. That is Abhishek’s biggest challenge. Some of the Mumbai projects are already late in delivery and the company will face financial penalties in London if a similar problem occurs there.
Time will tell if the London investments pan out as well as the Mumbai ones.
If they do, then Abhishek Lodha may well become India’s Donald Trump, minus the flash.