ASK Group plans to launch NBFC by July
Financial services firm ASK Group plans to launch a non-banking financial company (NBFC) by July in a bid to diversify its portfolio, a top company executive said.
The NBFC, to be called ASK Financial Holdings Pvt. Ltd, will provide loans against property to ultra-rich clients, promoter funding and loans against security, besides lending to real estate projects.
ASK Group has a diversified portfolio of Rs35,000 crore of assets under management (AUM), that includes a wealth management arm, property investment advisory, portfolio management services and a Singapore-based subsidiary called ASK Capital Management.
“We want to be relevant to the industry at all levels. With the NBFC, we will be able to offer working capital to current projects and at a cost that is between bank funding and structured equity. We are building a team which will have a dedicated CEO (chief executive officer) and it will be fully operational by July,” said Sunil Rohokale, chief executive and managing director, ASK Group.
ASK Group will provide an initial capital of Rs100 crore to the NBFC and raise it to Rs500 crore in the next couple of years or so, Rohokale said.
More than half a dozen asset management firms are setting up NBFCs to bridge the capital deficit in the real estate sector.
These institutional investors are in the process of procuring a licence to set up a new NBFC, buying out an existing one or reviving an existing but dormant entity to start lending. According to a March research report by property advisory Knight Frank, NBFCs have gained significant market share over the previous two years and currently contribute about 18% of the total institutional funding requirement of this sector.
While NBFCs have gained a larger share, from 12% in 2015 to 18% in 2016, PE funding has dropped from 61% to 58% in the same period.
On the real estate front, ASK Property Investment Advisors, the private equity arm of ASK Group, is also raising a Rs2,000-crore special situations fund from domestic and foreign investors to invest in residential projects where sales have been tepid.
With the new special situations fund, ASK will have two baskets of capital to invest in real estate projects—around Rs1,200 crore of equity capital and the Rs2,000-crore of structured capital (debt and equity mix).
“We are hoping that the deployment of capital this year will be significantly higher than last year. We plan to invest more than Rs1,000 crore in real estate projects this year,” said Rohokale.
Last week, ASK said it had invested Rs200 crore in a mixed-use project being developed by real estate firm ATS Infrastructure in Noida, marking the former’s entry into the commercial real estate segment.
The firm may invest in a couple of stand-alone commercial office projects and raise project-specific capital for them instead of raising dedicated funds to invest in office projects, he said.