Piramal Finance, the non-banking financial arm of Piramal Enterprises, has committed INR4.25 billion ($62.2million; €58.7 million) to Noida-based Prateek Group for a township development project in National Capital Region (NCR).
The deal will refinance the company’s existing debt including loans from Xander Finance. The rest will be used to complete the later-stage construction of the Prateek Grand City residential development near Ghaziabad.
Each unit of the development is priced between INR300,000 to INR800,000 and over 2.2 million sq. ft of the 10 million sq. ft project has so far been sold.
“We have been more cautious about investing in NCR compared to Mumbai and Bengaluru and our strategy has been to work with a few partners, with whom we do repeat deals. We are happy with the sales performance of the Edifice project and the overall track record of the developer, which prompted us to do a second deal,” said Khushru Jijina, managing director, Piramal Finance.
Last year, Piramal invested INR2 billion in the group’s luxury residential project, Edifice, in Noida.
Piramal started project construction financing in 2015 in addition to its traditional fund financing business. Today, project financing accounts for 52 percent of the group’s lending portfolio. It focuses mainly on late-stage, mid-market residential developments in both city-centric and suburban locations as well as commercial office projects.
The group has been expanding its lending business rapidly across different sectors. Earlier this month, it has announced its plan to enter the domestic retail housing finance market.
“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,” said Ajay Piramal, chairman, Piramal Enterprises Limited.
Piramal Finance provides services in both the real estate and non-real estate (operating infrastructure and other sectors) financing markets with an overall loan book of INR192 billion.