While most non-banks have burnt their fingers with such loans in the past, they are increasingly focusing on low-yielding developer advances to reputed builders as the preferred route to expand the wholesale book.
“We are consolidating our growth finance book, but we still like the business; it’s a good business materially,” said Jairam SreedharanManaging Director, Piramal Capital and housing finance. “The fact is that banks have severe limitations when it comes to lending to real estate. So, where will the money come from? We want to be one of those providers.”
Piramal Capital & Housing Finance bought Dewan Housing Finance Corporation (DHFL) in September 2021 for a total consideration of ₹34,250 crore. DHFL had a developer loan portfolio of over Rs 50,000 crore. The company has managed to shed the bulk of those loans.
Assets under management (AUM) climbed 35% to ₹63,780 crore at the end of September 2022, as the retail business grew 12% and the wholesale business shrank 13%.
“We love the real estate sector and we want to be a part of it, but we will incorporate some of the learnings from the previous cycle and ensure that they are fully incorporated into our new strategy,” Sreedharan said.
The non-bank lender is aiming to build a portfolio where retail accounts for 2/3 of the book and wholesale accounts for 1/3. At the end of this financial year, the company plans to acquire close to 50% of the retail assets.