Non-banking financial company Piramal Finance Ltd (PFL), a subsidiary of the diversified Piramal Enterprises Ltd, has set up a dedicated team to invest in affordable and mid-income residential projects across major metro cities in India.
The company said in a statement on Wednesday that it has identified an initial pipeline of Rs 3,000 crore ($466 million) for transactions across the main Indian realty markets.
Piramal Finance will follow the partnership approach for its investments in the affordable housing space.
The company provides both pure and preferred equity capital to top-grade developers looking to buy or develop land and in need of early-stage growth capital.
The firm may also explore acquiring land on its own and invite developers to participate on a joint development basis.
“While many players in the market are focused on providing equity or debt capital towards affordable and mid income housing, we believe that our ability to provide a comprehensive end-to-end solution – including both early stage equity as well as construction-linked debt – is truly unparalleled as it helps the developer achieve financial closure for the project on Day Zero,” said Khushru Jijina, managing director, Piramal Finance Limited and Piramal Housing Finance Limited.
He added that the firm’s ability to further drive sales through Brickex – its business-to-business (B2B) sales and research arm - and fund those sales through customised home loan products, specifically tailored towards salaried as well as self- employed end-users, acts as unique competitive advantage.
At the same time, through its proprietary wholesale loan book, PFL is able to sanction milestone-linked construction finance for developers so that they are able to achieve financial closure for their projects at the very outset.
As of September last year, PFL had a loan book of Rs 200 crore, originating primarily from its corporate lending relationship with real estate developers. It is targeting a loan book of Rs 15,000 crore by 2020.
The development comes at a time when affordable and mid-income housing has become a preferred segment for investors. Shunned for years, affordable housing has found many takers following a push by the central government.
Recently, HDFC Capital tied up with Prestige Estates to create a $390 million platform for low-cost housing in India.
Another active investor in the affordable housing segment is International Finance Corporation, the private sector investment arm of the World Bank. IFC recently committed capital for projects of north India-based developer Ashiana Housing.
Last September, PFL had announced its foray into retail housing finance through wholly-owned subsidiary Piramal Housing Finance Pvt. Ltd. Besides home loans, the company will offer construction finance and loans against property to small developers.
Piramal Finance’s assets under management stood at about Rs 50,000 crore as of September 2017.