Ajay Piramal forays into home loan market, sets up housing finance company

Piramal Finance, part of the $1.3 billion Ajay Piramal Group's flagship Piramal Enterprises, has forayed into retail housing finance by floating a new wholly owned subsidiary, Piramal Housing Finance Private Limited. The new subsidiary will offer home loans as well as loans against property and construction finance for small developers.

The move is a natural extension for Piramal Finance, with a wholesale business of over Rs.35,000 crore in assets under management (across debt and equity) and funding across 300 plus projects and over 100 development partners mainly in the real estate sector. Currently PFL is the second largest real estate development financier with a loan book of Rs 24,924 crore (as of June 30, 2017), next only to HDFC which has a loan book of over Rs 65,000 crore.

"The company will seek to fund the entire spectrum of real estate and 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", said Ajay Piramal, Chairman.

The Piramal Group also has privately held real estate development arm, Piramal Realty run by Ajay Piramal's son Anand. The three year old firm is  developing projects exclusively in Mumbai.

Investments in excess of US$ 1 trillion are required in housing and allied industry in next seven years and ten crore houses need to get added in next ten years, say industry research reports. At present over 60 percent of the Rs 14,405 billion housing finance market is dominated by four housing finance companies and three banks. While the total home loan market is growing at 16 percent a year, the share of HFC/NBFCs are growing at 21 percent a year and currently stands at 37 percent of the total housing loan market.  

Piramal sources said at present top 10 cities account for 45 percent of the total home loans in India andPEL's developer loan book is exposed to 8 of these top 10 cities. The company's inhouse aggregation platform Brickex, focusing on sales and marketing of real estate and financial services products, has a a network of 10,000 plus distributors across Tier I cities. The idea is to open 24 more branches and ensure 50 percent of branches will be in Tier II and III cities.