Piramal, Canadian pension fund to lend $500 mn to realty projs

Piramal Enterprises (PE) today announced a tie-up with a subsidiary of the Canada Pension Plan Investment Board (CPPIB), to jointly lend USD 500 million (about Rs 3,100 crore) to residential projects across the country.
Both the partners will contribute USD 250 million each and the funds will be deployed in the top housing markets, including Mumbai, Pune, Delhi, Bangalore and Chennai, Piramal Enterprises Chairman Ajay Piramal said.
The USD 500 million will be managed by Indiareit, Piramal Enterprises' private equity platform dedicated to invest in realty projects, he said, adding that the company is in talks with other bodies to launch similar funds but the tie-up with CPPIB is exclusive in nature for residential projects lending.

Typically, it will lend an amount of above Rs 100 crore for a period of up to four years to a project which has received all the sanctions and charge an average rate of interest of 20 per cent.
The company has been lending to the realty space for last two and half years through a non bank finance company, Piramal said.
Indiareit's managing director Khushru Jijina said the start of this platform gives the company a greater flexibility as the lending, to be managed out by the specially formed Indiareit, will not be done under the existing guidelines governing a NBFC.

"There is a lot of situation specific demand...Some may want money early, some late. We can also price the offering as per our wish," he said.

Jijina said the money will be deployed in up to the next three years and added that although the alliance is specific to this corpus, there will be a "recycling" with CPPIB investing "same amount or more" once the USD 500 million is exhausted.
He said apart from the flexibility, the other advantage for the Piramals is that they can now participate in the entire lifecycle of the project.
"We can enter at the land acquisition stage courtesy the Indiareit mandate of investing as a private equity fund and go up till the completion of the project through the structured debt offerings," he said.