Piramal Finance Ltd is looking to strengthen its investments in affordable and mid-income housing projects across major metros with an initial investment pipeline of ₹3,000 crore.

The company said it plans to scale up the investments to $2 billion by 2020.

“Our aim is to become an end-to-end solution provider. We do both early stage equity as well as construction-linked debt. This, we believe, helps the developer achieve financial closure for the project developer,” Khushru Jijina, MD, Piramal Finance Ltd and Piramal Housing Finance Ltd, told BusinessLine.

Jijina said the company will focus not just on the salaried class but also the self-employed through its proprietary channel Brickex.

Traditional home loan providers tend to focus on the salaried class which restricts the developer’s ability to generate interest from the self-employed end-users for want of finance.

Jijina said the company will be able to bridge this gap by funding individual home buyers (both salaried and self-employed) through a range of tailor-made products focussed on the affordable segment.

“Our ability to further drive sales through Brickex and fund those sales through customised home loan products specifically tailored towards salaried as well as self employed end-users acts as unique competitive advantage,” he added.

Partnership approach

Asked if the company had zeroed in on any partners, Jijina said the company will follow its trademark partnership approach for its investments in the affordable housing space. “We will look at existing partners. Several top developers are looking to foray into the affordable housing segment and we will look at funding opportunities with them. Developers have learnt to control costs and are looking at higher volumes and quick sales through such projects and that’s an opportunity for us,” he said adding the first disbursal is expected in two months’ time.

PFL provides both pure and preferred equity capital to top-grade developers looking to buy or develop land and need early-stage growth capital. PFL may also actively pursue an opportunistic acquisition of land on its own accord and invite developers to participate on a joint development basis.

Affordable housing segment has been seeing traction. Last week, Bengaluru-based Prestige Estates Projects Ltd said it will create an affordable housing platform with HDFC Capital Advisors Ltd, a subsidiary of HDFC Ltd, to jointly invest ₹2,500 crore in low- and mid-income housing projects.

A recent RBI study, however, pointed out that non-performing assets (NPAs) in affordable housing loans increased during 2016-17, as loans below ₹2,00,000 witnessed a significant growth and a “moderate” increase in NPA levels.

Asked to comment on this, Jijina said he was willing to undermine the risk.

Housing finance companies and public sector banks experienced a slowdown in housing loan disbursements during 2016-17, while the overall NPA levels for the loan segment increased year-on-year.

According to a research report by Cushman & Wakefield, the share of the affordable housing segment — in terms of the number of housing projects launched — increased from 25 per cent in 2015-16 to 30 per cent in 2016-17.

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