New Delhi: Piramal Fund Management, a unit of diversified firm Piramal Enterprises Ltd, plans to invest up to Rs 5,000 crore till March 2016 to finance construction projects.
"We plan to invest up to Rs 5,000 crore before March 2016 to finance construction projects," Piramal Fund Management Managing Director Khushru Jijina told PTI.
The funds would be utilised to finance projects across five cities, including Mumbai and Delhi NCR, and in future would also look at going to smaller cities like Jaipur, Nagpur and Ahmedabad, he added.
When asked about the financing of the investment, he said it would be mostly through internal accruals.
The Piramal group, mostly into healthcare sector earlier, is plush with fund after it sold its domestic formulation development business to Abbott for USD 3.72 billion in 2010. It has been diversifying into new business areas.
Piramal Fund Management had announced its plans to enter the construction finance space in third quarter of FY15. It has approved nine construction finance proposals totalling Rs 1,100 crore.
"The initial transaction volume is spread across Mumbai, Delhi NCR, Bangalore, Pune and Chennai, with projects located in micro markets with robust demand fundamentals," the company said.
The funds have been earmarked across a combination of late-stage, mid-market residential developments in both city centric as well as suburban locations, it added.
Besides, the funds are also intended for construction of a brown-field commercial office development.
These facilities range from 3-5 years each, with a sufficient principal moratorium period to allow the project cash-flows to stabilise, the company said.
"With construction finance, we have consciously completed the last remaining element in our our suite of product offerings," Jijina said.
This makes sense for the company as well as for the development partners as the company is now able to further its engagement with them and fund the entire project life, he added.
"We are looking at many more such investments where the developers are experienced, projects are profitable and de-risked, and our investment is ring fenced," Jijina said.
Piramal Enterprises has presence in various sectors including healthcare, healthcare information management and financial services.
Piramal shares were trading at Rs 877.75 a piece on the BSE, down 2.77 percent from its previous close.
