Piramal Finance to expand in tier II cities; up biz in non-realty sectors

By 2020, Piramal Enterprises expects the loan book for the home loan business to reach Rs 150 billion

Piramal Finance, the investment arm of Ajay Piramal Group, is looking to widen its business in tier II cities and among non-real estate borrowers.

"While our wholesale lending arm can invest in Mumbai and Delhi, our housing finance company can lend in tier II cities also. The wholesale business would have found it difficult to lend in tier II city as it should open a branch there," said Khushru Jijina, managing director at Piramal Finance.

Jijina said that Piramal’s housing finance company will expand in cities like Surat and Nasik in the first quarter of next financial year and open branches in Gurgaon, Delhi, Noida, Pune and Bengaluru by the end of February 2018.

"We will work on a hub and spoke model. For instance, Pune will take care of Nasik," he said.

Within four months of receiving the license, the HFC has achieved assets under management of Rs 5.5 billion (Rs 550 crore). The HFC was set up last year.

By 2020, Piramal Enterprises, the parent of Piramal Finance, expects the loan book for the home loan business to reach Rs 150 billion.

Jijina said the company would lend to non-real estate borrowers, on a sector agnostic basis, through its corporate finance group (CFG) for loans of Rs 1 billion and above and through emerging corporate lending group (ECLG) where it can do deals between Rs 100 million and Rs 1 billion.

"We can do mezzanine debt, senior debt, project financing and so on. Any promoter or any industry from any corner of the country can dial us for finance," he said.

He said Piramal Finance has done investments in hospitality sector through its CFG and is looking at warehousing and logistics actively.

Piramal Finance invested Rs 6.5 billion in Vatika Hotels, which owns The Westin Gurgaon, a 313-room keys hotel located in Gurugram's central business district and The Westin Sohna Resort & Spa in Sohna, Gurugram. The deal will allow Vatika Group to increase their stake in the company by providing an exit option to existing equity investors, reports said recently.

The second transaction, the firm committed Rs 5.5 billion of structured debt towards the Advantage Raheja Group for two hospitality projects — The JW Marriott in Bengaluru and the Crowne Plaza in Pune. 

“If anyone wants mezzanine debt in hotels, we can provide through CFG, we lend construction finance through the wholesale lending arm and we can discount average room rates (ARRs),” he said.

Piramal has also lent Rs 50 billion in the last 15 months through lease rent discount discounting (LRD) where developers discount their future rent receivables.

Jijina said the company plans to double its lending through LRD by March 2019.

Piramal is in the process of investing about Rs 15-20 billion in realty developer Wadhwa Group's portfolio of projects, reports said recently.

Piramal Finance had an AUM of over Rs 650 billion as of  December 2017.