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Piramal sets up housing finance unit

The group aims to cater to demand across India’s real estate and non-real-estate financing markets.

Piramal Enterprises Limited, one of India’s largest conglomerates, has announced a plan to enter the domestic retail housing finance market, PERE's sister publication, Private Debt Investor, reported Monday.

Piramal Finance Limited (PFL), the financial arm of the group, has applied to the National Housing Bank to incorporate a housing finance company (HFC) as a subsidiary, according to a statement.

“Retail housing as an asset class has always been representative of the significant economic potential demonstrated by India’s growing middle class with the individual home loan segment tracking healthy growth. Given a fundamental underlying demand for urban housing coupled with increasing affordability amongst a growing working class, the long-term outlook for this business is attractive,” said Khushru Jijina, managing director, Piramal Finance Limited.

The new unit will provide individual housing loans as an extension to the company’s existing real estate financing products ranging from early-stage equity to later-stage debt financing including construction finance for residential, both mezzanine and structured debt as well as lease rental discounting for commercial.

PFL provides services in both real estate and non-real estate (including operating infrastructure and other sectors) financing markets with an overall loan book of INR192 billion ($280 million; €267 million).

“We would naturally stand to benefit from our existing relationships with our development partners and our ability to extend the tenure of our relationship from financing construction of the project to funding the individual home buyer,” added Ajay Piramal, chairman, Piramal Enterprises Limited.

The group has been actively extending its services in the domestic financing market. Last year, Piramal Fund Management, the company’s real estate investment arm, made over INR100 billion in aggregate investments in South India.

The company has exposure across both the residential and the commercial segment in the south. It has also recently launched a flexible Lease Rental Discounting program to finance completed commercial real estate projects in the region.