India: Piramal Finance to invest $43m in Puranik Builders’ Thane project

Photo: Ramesh Pathania/Mint

Piramal Finance Ltd (PFL), part of Piramal Enterprises Ltd, on Wednesday announced that it has sanctioned around Rs280 crore to Puranik Builders for its Puranik City Reserva project in Thane, a Mumbai suburb.

Launched two months ago, the 2.2 million sq.ft residential project is spread across 12 acres and has a revenue potential of around Rs2,000 crore. The project is expected to be completed over the next 6-7 years.

“We look forward to enabling the growth of the group (Puranik Builders) with our offerings across both the wholesale as well as retail business,” said Khushru Jijina, managing director of Piramal Finance and Piramal Housing Finance.

Within the real estate space, PFL provides early-stage equity to late-stage debt, construction finance, lease rental discounting as well as bulk buying apartments.

Piramal Finance, through its entire suite of products, is following a “financial partnership” model by extending holistic solutions to developers, the company said in a statement.

It has also recently received a licence from the National Housing Bank (NHB) to operate a retail housing finance vertical—Piramal Housing Finance Pvt. Ltd—which offers home loans as well as loans against property and construction finance for small developers.

“With this deal, it will help us to achieve a complete financial closure for the project. We firmly believe that the market today presents attractive opportunities and we look forward to relying on Piramal platform’s experience and expertise as a lender of choice as we chart out our own path towards further growth,” said Shailesh Puranik, managing director, Puranik Group.

The Mumbai-based real estate firm has so far developed over 5 million sq.ft of real estate and is currently developing around 15 million sq.ft in Thane, Pune, Lonavala and Karjat, among others.

The last four years have seen funding from private equity firms and non-banking financial companies (NBFCs) picking up for under-construction real estate projects, while bank loans for such projects have plunged.

In a report released last month, research and consulting firm KPMG said investments by PE funds and NBFCs shot up to $4.6 billion from $0.9 billion, respectively, while banks lent builders $1.3 billion for under-construction projects in 2016, down from $4.4 billion in 2013.

Rising non-performing assets (NPAs), higher risk provisioning and mounting losses have led to significant reduction in credit offered by banks, the report said. However, with improved transparency and governance in the sector, funding from the banking sector may increase on the back of reduced risk, the report said.

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