Piramal enters housing finance
Piramal Finance launched its wholly-owned subsidiary, Piramal Housing Finance, on Wednesday, with an initial capital of ~1,000 crore.
The housing finance arm plans to achieve a loan book of ~15,000 crore by 2020. It currently has assets under management (AUMs) of more than ~200 crore. The company has an operational branch in Goregaon and plans to open another in Thane.
“Majority of the HFCs (housing finance companies) do not understand real estate. Strong partnerships with developers give us an unique edge,” Ajay Piramal, chairman, Piramal Enterprises, said. Piramal Housing Finance has already partnered with more than 15 developers on 30 projects.
Khushru Jijina, managing director, Piramal Capital, said the HFC was currently operating in Mumbai and would be rolled out in Pune, Bengaluru and the National Capital Region (NCR), and would be expanded to tier-II cities, too.
The financial services arm of Piramal Enterprises had received a housing finance company licence from the National Housing Board on September 4.
Piramal said housing finance was a “highly fragmented” industry with only 10 HFCs having AUMs of above ~10,000 crore, and only 16 with AUMs of ~5,000 crore. “With the rising levels of income, focus on affordable housing, and rising aspirations such a small loan book means that an opportunity exists,” he said.
The firm would provide loans across the value spectrum, to both salaried and self-employed, with a turn around time of 11 days and two days, respectively.
At present, Piramal Finance has an investment of ~4,583 crore with a majority stake of 20 per cent in Shriram Capital Limited, which also provides housing finance loans. “Shriram gives much smaller ticket loans like ~10 lakhs, we will not do that. When we entered this space, we wanted to ensure that we do not set foot where Shriram operates,” Piramal, who also acts as the chairman for Shriram Capital, said. He also said the two would be complementary and not competitive.
The company has a wholesale loan book of ~28,648 crore, with the real estate constituting ~24,924 crore in August 2017. The alternate AUM was ~6,727 crore, with the real estate contributing ~5,727 crore.