Home >Companies >News >Piramal consolidates its financial services business under Piramal Finance

Bengaluru: In a second and more conclusive restructuring of its financial services business, Piramal Enterprises Ltd (PEL) has moved all assets and liabilities related to lending to real estate and non-real estate projects to its unit Piramal Finance Pvt. Ltd.

Piramal Finance, the group’s non-banking financial company (NBFC), which hasn’t been very active, will now house most of the financial services business of the group.

Only some of the real estate funds which deployed equity capital under Indiareit Fund Advisors Pvt. Ltd will remain with PEL.

“The restructuring, which involved the moving of assets and liabilities, is a process that took place over the last couple of months and has been concluded now. With this move, the entire financial services business has been consolidated and moved under Piramal Finance," said Khushru Jijina, managing director at Piramal Finance.

Last year, Ajay Piramal’s financial services business was restructured and integrated in a prelude to the spin-off of the unit and Piramal Enterprises Ltd’s healthcare business, Mint reported in July last year.

Though the financial businesses were brought under a subsidiary, Piramal Fund Management, the actual lending was still being done from PEL.

Piramal Finance is not a new entity, but it was largely offering loans to the education sector so far, while everything else was done from PEL.

The restructuring comes after PEL announced Thursday that it will apply to the National Housing Bank (NHB) to incorporate a housing finance company.

Once formed, the new housing finance company will operate as the subsidiary of Piramal Finance. Effectively, this means Piramal Finance will go on to offer a diverse range of capital ranging from construction finance, structured debt, loans to commercial office projects, housing finance as well as loans to sectors such as infrastructure and cement.

Piramal Finance currently has an overall loan book of Rs19,170 crore. The group also manages external funds with assets under management (AUMs) of Rs7,315 crore, including alliances with leading global investors.

The new housing finance arm will give Piramal a distinct edge over others, said analysts. Interestingly, PEL had bought a 10% stake in Shriram Housing Finance Ltd, an affiliate of Shriram City Union Finance Ltd, for 790 crore in 2014.

Jijina said the two entities will not compete with each other.

“Shriram Housing Finance mainly lends to the informal sector in small Tier III and IV towns, while Piramal Finance will lend to its own vast developer base and others in Tier I and II cities and their distant suburbs," he said.

In addition, Piramal Finance’s housing finance arm will also engage with smaller developers to offer loans below Rs50 crore, a segment that it has not tapped before this.

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