Piramal resorts to hedge funds to finish uncompleted projects

Mumbai based Piramal Enterprises Ltd. is seeking new investments to fund working capital for real estate projects.

Piramal resorts to hedge funds to finish uncompleted projects. Piramal Enterprises Ltd resorts and scouts for new investors to help hedge funds raise cash and fund working capital. For the real estate projects it leads. Piramal Enterprises Ltd is seeking new investors including hedge funds. In order to help raise cash and fund working capital for the real estate projects it lends to so they don’t languish half built.

The firm controlled by Chairman Ajay Piramal is looking to bring in investors alongside its real estate-focused shadow bank unit to help complete projects, said Khushru Jijina, Managing Director of Piramal Capital & Housing Finance Ltd. The focus is on developers the lender has already provided loans to, Jijina said in an interview.

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India’s real estate market is grappling with a lingering lock down. Slowed construction and sharply crimped new sales in an already struggling market. Developers have been leaning on lenders like Piramal to fund the cash needed. To complete partly-built projects to bridge funding gaps resulting from a lack of revenue.

Piramal Wants Raised Cash

“Bringing in the right co-investor will allow a continued flow of working capital to the developer, which will in turn ensure that the project is completed and our asset quality is conserved,” Jijina said. “We do not want a partner who will only be interested in outright buyouts and then just leave.”

Piramal forecasts having to fund as much as ₹1,500 crore ($200 million) in working capital to developers to finish projects assuming the firms’ repayments to it are negligible due to the Coronavirus outbreak.

The sector was struggling even before the virus pandemic. The collapse of Infrastructure Leasing & Financial Services Ltd in 2018 triggered a credit crisis that has since claimed other victims including Dewan Housing Finance Ltd and Altico Capital India Ltd., another real estate lender.

Piramal has raised as much as ₹8,000 crore in this financial year through debt. Which were raised Rs 900 crore from two public sector banks. United Bank of India and Bank of India at 8.9% for five years. And Rs 500 crore from IndusInd Bank for one year at 9% to meet the obligations. Combined with its ₹4,000 crore in cash at the end of March. However, this will enable Piramal to keep funding its developers. Also paying back the ₹10,000-crore debt due in the six months ending September, Jijina said.

Recently, Carlyle and Piramal Pharma sign agreement on a 20% Strategic Growth Investment.