MUMBAI: Piramal Fund Management, part of Piramal Enterprises, plans to invest up to Rs 5,000 crore over the next one year to finance construction projects, a top company executive said.
The fund has already invested in nine realty projects through construction finance proposals totaling Rs 1,100 crore in the last three months.
"We are looking to invest up to Rs 5,000 crore in real estate projects through construction finance before March 2016. Currently, developers' demand for construction finance is not being met entirely and the gap exists," said Khushru Jijina, MD, Piramal Fund Management.
These investments, to be backed by mortgage of respective projects, will be made through internal accruals of Piramal Enterprises.
The returns from these loans are expected to be in the range of 14-16%.
The fund had announced its plan to enter the construction finance space in the third quarter of FY15, and has already extended loans to developers in Delhi-National Capital Region, Mumbai, Pune, Chennai and Bengaluru.
The funds have been earmarked for a combination of late-stage, mid-market residential developments in both city and as well as sub-urban locations. Besides, funds are also intended for construction of a brown-field commercial office development, the fund said. These facilities range from 3-5 years each, with a sufficient principal moratorium period to allow the project cash flows to stabilise.
The Piramal Group sold its domestic formulation development business to Abbott in a Rs 17,000-crore deal in 2010 and has been diversifying into new business ventures.
Piramal Fund Management's structured investments division invests in various sectors including infrastructure and total funds under management in these businesses are around $2 billion. Piramal Fund also has strategic alliances with pension funds like CPPIB Credit Investment and APG Asset Management.