Piramal Fund Management (PFM), the financial services arm of Ajay Piramal owned Piramal Group, will offer lease rental discounting (LRD) for completed commercial assets, including office buildings, blocks and retail outfits, according to a statement issued by the company.
It further explained that PFM has already identified an initial pipeline of transactions and will deploy R1500 crore in two projects immediately. Further, it intends to scale up the book size to R10,000 crore by FY18.
Of the two deals already committed, one is located in Mumbai whereas the other in Bengaluru, the two markets that are leading the current rally in the commercial or office segment. Both properties, according to a senior management personnel, are sized about approximately three lakh square feet in size. The fund’s exposure to the Mumbai based project is R1000 crore and the Bengaluru project is R500 crore. Both are fully leased out projects. PFM did not want to divulge more details regarding the two transactions.
The fund will be financing developers of commercial and retail projects up to 75% of the discounted cash flows from the property for tenure between 9 years and 12 years.
Debt financing has so far been the PFM’s mainstay.
In the beginning of the year, it started lending construction finance for commercial projects as well. Under this platform, the investments will be made in Bengaluru, Mumbai, National capital region (NCR), Hyderabad, Chennai and Pune. “While creating this platform will help the group diversify its offerings, it will also build stronger relationships with developers with who we have existing relationships,” said Khushru Jijina, managing director of PFM. Compared to banks, PFM will offer more competitive rates as well as flexibility in the time line of repayment, Jijina added.