Piramal’s SFG plans aggressive expansion

Mumbai: Piramal Enterprises Ltd’s Structured Finance Group (SFG), the non-real estate lending business, plans to provide customized lending solutions to companies across sectors and double its team as it seeks to expand its business aggressively.

“Any promoter anywhere in India who wants money, wants flexibility and wants a good partner, should call on us. We want to become the first port of call for all companies,” said Khushru Jijina, managing director at Piramal Fund Management, the wholesale funding arm of the Piramal Group.

The group’s assets under management is approximately Rs35,000 crore, which includes gross outstanding loans, amounts sanctioned but not disbursed, third-party funds under management as well as the existing SFG portfolio.

“At SFG, we do not want to get limited by products or lending rates. We are ready to transact from 12% upwards, depending on the risk profile of the specific situation,” Jijina said.

SFG is expanding its product portfolio to include offerings such as loans against shares and senior debt. In light of the broader remit, it has undergone a change of name from SIG (Structured Investment Group) to SFG.

SFG has already taken the first step towards expanding its sector focus. On 23 August, Mint reported that SFG had agreed to invest Rs150 crore in Smaaash Entertainment Pvt. Ltd, a sports-based entertainment company co-owned by cricketer Sachin Tendulkar.

Prior to the Smaaash investment, SFG’s core focus was operating infrastructure and renewable energy.

On 15 August, Mint reported that SFG was in advanced talks to invest Rs800 crore (approximately $120 million) in solar power producer ACME Solar. In March, Mint had reported that the unit was investing Rs900 crore ($132 million) in Essel Infrastructure Ltd’s solar platform across India.

“We were focused on high-yield mezzanine debt in infrastructure. Now we are saying that we are sector-agnostic and we willingly move down the risk curve from 12% on to 18% and above, depending on the specific situation,” said Jijina.

Acquisition financing is another area of interest for the firm. “If we like the structure, and if we know that we can secure ourselves against visible cash flows, we will do it,” he said.

To support the new broadened vision, SFG will hire aggressively across all levels.

“We are going to go out aggressively in the market, so the throughput is going to be bigger and that obviously will mean that we need to add more team members across senior, mid and junior levels. You will see a lot of action on the recruitment front within SFG,” said Jijina. SFG has around 15 people as of now. In the next couple of months it is looking to double the team, he said.

“When we started real estate lending three years back, we had 20-odd people. Today we have around 130 people, which is a big number. You will see the same traction and scale-up in SFG,” he said.

Jijina added that the renewed focus on SFG does not mean that the group is slowing down on real estate lending.

“We feel that a lot more still needs to be done in real estate. So the move to expand into other sectors is certainly not because of a lack of activity in real estate,” he said.

The business has reached a very large scale in the residential space, but has just started lending in the commercial space.

“In future, we may even look at a core type of fund, where we don’t lend but invest in commercial assets, or participate alongside a developer to develop commercial assets. We haven’t touched that area at all,” said Jijina.

The Real Estate (Regulation and Development) Act will also create new opportunities that the lending institution will look to take advantage of, he said.

“When RERA (Real Estate Regulatory Authority) comes into effect, there will be certain problems of funding and restrictions on cash flows for developers. We are working on a package to help them overcome that. We are identifying the gaps and problems in RERA for the developer and are working on a package to specifically address those,” said Jijina, without commenting on the details of the product that Piramal is working on.