Piramal Capital and Housing Finance Ltd (PCHFL), a subsidiary of Piramal Enterprises Limited, has mobilised close to Rs 2,500 crore funds from banks like State Bank of India, Union Bank, Indian Bank, and other corporate investors to integrate Dewan Housing acquisition and also to expand into retail assets.
These funds have come via the non-convertible debenture (NCD) route as the banks are flush with liquidity. Most of the banks are using the NCD route to park short-term money for 1-3 years in high-rated companies. The company has also raised some rupee term loans from banks. With interest rates at rock bottom, the company has a good opportunity to mobilise 3-5 year money.
"The bond market is indeed opening up for double-A players like us. Hopefully, this trend would continue as well. Retail bonds are an opportunity. As and when debt MF comes back in the game, there will be more options to raise money," hopes Jairam Sridharan, who heads the Consumer Finance Business. Sridharan made this comment in a recent media interaction when BusinessToday.In asked him about asset-liabilities challenges in the NBFC space. The debacle of IL&FS and Dewan Housing was primarily because of funding the long term retail and wholesale loans with the short term sources like the commercial paper and certificate of deposits. The higher resilience on short term sources created mismatches in the balance sheet.
For long, Piramal had ambitions in the financial services, but somehow the group didn't succeed in some of the strategic acquisitions it made. In January, Ajay Piramal finally won the bid for acquiring the failed Dewan Housing Finance Corporation (DHFL) in a hotly fought bidding war with the US-based Oaktree. Piramal made a Rs 34,250-crore bid to acquire the housing finance company. While certain approvals like NCLT are still awaited, the company is gearing to invest in the retail businesses.
In a crowded retail loans space, Piramal Capital is carving out a niche by expanding into the semi-urban and rural areas, where it plans to target the budget customers. The retail business currently includes affordable housing loans, mass affluent housing loans, loans against property, secured small business loans, purchase finance, digital unsecured loans, and used-car loans etc.
Post DHFL acquisition, Piramal's retail portfolio would be mortgage heavy in the initial years.
Currently, the company's lending portfolio is around Rs 45,000 crore. Out of this, Rs 5,000 crore is in retail assets, which is about 11 per cent. DHFL has got a substantial retail portion, but that will get added once the regulatory approval comes from the authorities.
Piramal, which has a large wholesale business in the financial services, also gets a wholesale real estate business from Dewan housing acquisition. In the medium term, the company would be aiming to have a share of two-third in the total lending portfolio.
The company is also looking at two-wheeler, education finance and loans to small businesses. At the moment, the company is not very keen on the consumer durable financing which the NBFCs like Bajaj Finance and some banks are exploring.