Piramal plans to set up financial services firm

Piramal plans to set up financial services firm

Mumbai: Billionaire Ajay Piramal-led Piramal Healthcare Ltd plans to set up a financial services company that will initially focus on funding property projects.

Piramal Capital, the fully-owned unit of Piramal Healthcare, will gradually enter the business of lending to home buyers, Piramal said in an interview to Mint.

The proposed company will also make private equity and portfolio investments in high growth sectors, on the lines of Piramal Healthcare’s investment in Vodafone Essar Ltd earlier this week.

“We are in the process of setting up the new finance service company with a few key people are already on the job to finalize the structure," said Piramal.

Piramal Healthcare, which has a cash of at least 10,000 crore on its balance sheet after the sale of its domestic formulation business, had said earlier that it will look at new businesses outside healthcare.

Piramal Healthcare on Wednesday said it has paid 2,856 crore to buy a 5.5% stake in Vodafone Group Plc’s Indian unit with a plan to exit in the next two years.

A big portion of the surplus cash may be invested in the financial venture, as part of the company’s long-term business plan. The Ajay Piramal group is also betting on two other businesses—real estate development and making glass bottles. Piramal Realities, the real estate business, has been recently restructured with Anand Piramal—Ajay Piramal’s son—taking up a role in the senior management.

The group’s glass bottle making company—Piramal Glass Ltd—intends to become one of the top three manufacturers of glass bottles for the cosmetics and perfumery segment globally. Piramal Glass reported 79% growth in net profit in the first quarter ended 30 June.

“We have identified certain areas including our existing healthcare businesses such as contract manufacturing, emergency care and drug research for investment with a long term plan," Piramal said.

Government-controlled State Bank of India is the nation’s largest housing finance provider with a home finance portfolio of 86,769 crore. The second largest mortgage lender Housing Development Finance Corp. has a loan portfolio of 85,649 crore. Rising interest rates and an economic slowdown may dampen the interest of prospective home buyers, hurting mortgage lenders, according to analysts.