Piramal group merges Indiareit with non-banking finance arm

Bangalore: In a bid to offer real estate firms a full range of financial services, the Ajay Piramal group has merged its private equity (PE) business and lending arm to form Piramal Fund Management Pvt. Ltd.

The integrated company, which will be a part of the holding company Piramal Capital, has combined Indiareit Fund Advisors Pvt. Ltd and non-banking finance arm Piramal Finance.

Instead of the two businesses chasing the same developer, they would now offer an entire bouquet of services on a single platform, according to Khushru Jijina, managing director, Piramal Fund Management.

“This reorganization will facilitate engagement with our development partners to meet their funding requirements across the entire lifecycle of a project,” said Jijina.

At the land-buying or pre-project approval stage, equity capital would be offered and after approval, debt would be given, Jijina said.

The merged company has also started offering construction finance for the first time and has signed a few deals.

“If the project is at the construction level, then we would give construction finance. Construction funding is new to us and we have never done it in the past, but it would help us meet the demand for capital from developers,” Jijina added.

Ajay Piramal, chairman, Piramal Enterprises, highlighted the benefits of the two units working together. “Integrating the debt and equity platforms into a combined entity will ensure that we are best positioned to gain valuable information, skills and insights—all of which will enhance our ability to forge lasting relationships with our development partners,” he said in a statement.

An expert agreed. “This kind of a structure will help leverage each other’s relationships and experiences that will be beneficial,” said Maadhav Poddar, associate director at EY, a consulting firm earlier known as Ernst and Young. “With a single decision maker, the negotiating power will also be stronger in the market and the pool of capital will naturally increase.”

Piramal Fund Management manages ₹ 7,550 crore on the equity side, including five domestic funds, an offshore fund and three third-party mandates. The two stand-alone teams have combined into a single, 60-member group. After the restructuring of sorts, the company has another ₹ 3,000 crore as part of a proprietary debt loan book.

In February, the group formed a strategic alliance with Canada Pension Plan Investment Board to set up a $500 million real estate finance company in India. Under this arrangement, the two partners have made an initial commitment of $250 million each and will offer rupee debt financing to residential projects in large property markets.

On private equity, Jijina said the company wants to revive a plan to raise an offshore fund that was stalled some months back due to low investor sentiment.

On the domestic side, the company will raise a new ₹ 750 crore fund once it deploys part of the ₹ 1,000 crore Fund V that is currently being invested.