Piramal Fund Management (PFM), the financial services arm of the Piramal Group, has expanded its portfolio to offer Flexi Lease Rental Discounting (LRD) loans for completed commercial assets that include office and retail space, the company said in a statement.
The firm said it has already identified an initial pipeline of transactions worth Rs 1,500 crore and intends to scale it up to a book size of Rs 10,000 crore by FY2017-18.
With the launch of Flexi LRD, Piramal Fund is targeting higher liquidity transactions than what the traditional banks are able to offer, along with added flexibility for the developers in terms of both serving and repayment. It said owners of completed assets will therefore be able to approach PFM to raise significantly more flexible financing than they would otherwise be able to source from a bank.
Khushru Jijina, managing director, Piramal Fund Management, said, “By introducing this innovative form of Flexi LRD, we are targeting owners and holders of marquee assets and offering them a form of finance that is both competitive and flexible whilst also enabling them to raise more money against the same asset compared with traditional forms of LRD.”
He said the firm is in the business of forging strong relationships on the back of its ability to act as a provider of perpetual capital and has been working on perfecting this structure for many months.
The development comes soon after the firm said it would be backing commercial projects and aimed to deploy Rs 5,000 crore across key markets like Mumbai and Bengaluru.
The commercial real estate market has picked up on the back of healthy leasing activity, leading to a positive impact on rentals. Office space consumption across the top cities was approximately 11 million sq ft in Q3 2016, according to real estate consultancy firm CBRE. This was the highest level of absorption in the past 10 quarters.
Over the last couple of quarters, the firm has introduced a slew of innovative products for the real estate market. Recently, it added a new strategy to deploy capital to select existing development partners. The firm said it would allow some borrowers to draw from a pre-sanctioned limit like a pre-approved loan, a move that would allow borrowers to get funds quicker.
Piramal Fund Management, which is one of the most active providers of capital in the residential real estate market, also has an exposure to the sector through schemes such as Mumbai Redevelopment Fund and Apartment Fund, among others.
Piramal Fund Management focuses on real estate, addressing funding across the entire capital stack ranging from early stage private equity to senior secured debt and even construction finance, as well as structured finance to firms operating in sectors other than real estate.
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