Bengaluru: Piramal Group plans to collaborate with public sector and foreign banks for co-lending opportunities, which will generate fee income for the company and help maintain return on equity (ROE), the firm's chairman Ajay Piramal told analysts on a call on Tuesday.
“We have, in the past, explored high-yield, wholesale funding opportunities through our funds. Going forward, we will be collaborating with public sector and foreign banks for co-lending opportunities. Co-lending opportunities help in generating fee income and main ROEs despite our diversification into retail financing," Piramal said.
Piramal also said there are many portfolio purchasing and merger and acquisition (M&A) prospects in the housing finance sector, as it has slowed down due to liquidity crunch, which has led to some of these companies vacating the space.
The group had earlier said its strategy is to build newer platforms for co-lending with like-minded institutions.
Piramal had partnered with pension and sovereign funds for co-funding. In May 2019, it had signed an agreement with Canada’s largest pension fund manager Canada Pension Plan Investment Board (CPPIB) to co-sponsor India’s first renewable energy-focused infrastructure investment trust (InvIT) with an initial targeted corpus of up to $600 million.
On the real estate front, Piramal in December had collaborated with IIFL Wealth Management Ltd. Under this collaboration, both will co-invest in an alternative investment fund (AIF) with a target corpus of ₹2000 crore and will back projects that are at an advanced stage of completion.
Piramal, along with Bain Capital Credit, has formed an India Resurgence Fund (IRF) to invest capital directly into distressed businesses. Four investments have been made from this fund.
By March 2020, the company would exceed its earlier stated commitment of bringing in ₹8,000–10,000 crore of equity, with inflows of up to ₹14,500 crore, through various initiatives.
“...With this capital infusion, our company is well-capitalised to tap both organic and inorganic opportunities arising from industry consolidation and effectively transform our financial services business from a largely wholesale business into a well-diversified financial services business," the chairman told analysts.
As far as the pharmaceutical business is concerned, the group plans to raise additional equity capital for growth in the future.
"...Infusion of additional capital in pharma is the next step towards unlocking the value of the company," Piramal said.