Piramal Capital in advanced talks with Apollo Global for $ 500 million loan

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Ajay Piramal, President, Piramal Enterprises. (File photo) | Photo credit: BCCL

New Delhi: Piramal Capital & Housing Finance Ltd, a wholly owned subsidiary of Piramal Enterprises, is reportedly in the final stages of talks with global alternative asset manager Apollo Global Management to raise more than $ 500 million (around Rs 3,700). It should be noted that if the deal goes through, this will be one of the biggest debt transactions in real estate / non-bank finance this year.

The company will guarantee funds by pledging part of its developers’ loan portfolio, and the selected loan portfolio to be offered to the New York-based private equity firm has already been established, said two people with knowledge. direct from the subject. HEY. In addition, Piramal is working to finalize the contours of the operation to be carried out in a few weeks.

“This financing will be used at a coupon rate of 16-17% per annum, while the loans used as collateral have higher yields backed by mortgages agreed with the developer at the time of the sanction,” the financial daily said. citing one of the people. mentioned above as saying. Apollo, which manages around $ 316 billion in assets worldwide, will have the choice of choosing Piramal loans.

Several press reports have mentioned that Indiabulls Housing Finance raised Rs 2,200 crore last month from Oaktree Capital by pledging part of its home loans to troubled global funds. These financing arrangements indicate a growing interest among foreign investors in the debt portfolios of Indian non-bank financial corporations (NBFCs) with exposure to real estate.

Saurabh Shatdal, managing director of capital and land markets at Cushman & Wakefield, told the financial daily: “The intrinsic value of real estate in projects has not depreciated due to the discount that these players of private equity are getting today. These books could become available at a discount of 50 to 70%, but the projects have not lost this proportional value and therefore the interest they generate. “

In 2019, Piramal Capital and Housing Finance Ltd sold its Rs 2,000 crore loan exposure to Mumbai-based real estate agent Lodha Developers to a unit of Goldman Sachs in order to reduce exposure to a single developer borrower.

It is worth mentioning here that the shaking that followed the failures of Infrastructure Leasing & Financial Services (IL&FS) and the resulting liquidity crunch, many lenders reduced their focus and exposure.

Piramal Capital had a loan portfolio of Rs 50,963 crore at the end of March, including Rs 37,561 crore for real estate while corporate finance and emerging business loans were Rs 7,868 crore. The housing finance company has a retail loan portfolio of Rs 5,531 crore, the post said.

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