Non-banking financial company Piramal Finance Ltd has announced its foray into retail housing finance through wholly-owned subsidiary Piramal Housing Finance Pvt. Ltd.
Besides home loans, the company will offer construction finance and loans against property to small developers.
The company, which received the licence early this month, currently has a loan book of Rs 200 crore, originating primarily from its corporate lending relationship with real estate developers. It is targeting a loan book of Rs 15,000 crore by 2020.
Ajay Piramal, chairman, Piramal Enterprises, said, "Through Piramal Housing Finance, we will be able to deliver a seamless and customer-centric experience to all our stakeholders including individuals, developers, agents, partners and now the target end-users as well." Piramal clarified that the business will target bigger ticket size than that catered to by Shriram Group, where Piramal has long-term equity investments worth $700 million.
Most of the home loan distribution will be driven through developer relationships that Piramal Finance already has through its wholesale lending arm.
Piramal added that Piramal Finance's assets under management stood at about Rs 50,000 crore, of which about 60% was accounted for by corporate finance. The new entity will leverage its relationship of extending retail loans through business (Piramal Housing Finance) to business (developer) to consumer (retail home buyers), or B2B2C.
The wholesale business has over Rs 35,000 crore in assets under management across debt and equity, with funding spread across 300 plus projects.
The retail housing finance business will initially focus on a product rollout across major metro cities, and thereafter seek to establish a pan-India presence. The retail construction finance arm will focus on local developers in Tier I and top developers in Tier II and III geographies.
The company plans to fund the entire spectrum of real estate, from affordable to luxury, and cater to both salaried and self-employed individuals by offering tailor-made loans at competitive market rates, he added.
Khushru Jijina, managing director of Piramal Finance and Piramal Housing Finance, said: "Given the size, scale and market relevance of the wholesale lending business, it was a natural progression to assess opportunities within the retail lending space."
Piramal Enterprises has a presence across pharmaceuticals, healthcare insights and analytics, and financial services. It posted consolidated revenues of over $1.3 billion for FY2017, of which 51% came from outside India.
Financial services play
The group has identified financial services as its key growth driver and developed significant expertise across asset classes and sectors. Its financial services arm, Piramal Capital, houses two entities—Piramal Fund Management Pvt. Ltd and Corporate Finance Group—targeting real estate and infrastructure.
Piramal Fund Management Pvt. Ltd was formed in 2014 under the holding company Piramal Capital, which combined the assets of Indiareit Fund Advisors Pvt. Ltd and Piramal Finance.
In the same year, Piramal also took over as chairman of financial services powerhouse Shriram Capital Ltd, the holding company of the Chennai-based Shriram group’s various financial services units.
Piramal group picked up a 10% stake in Shriram Transport Finance in 2013. Later, in 2014, it bought a 20% stake in Shriram Capital Ltd for Rs 2,014 crore ($334 million).