Mumbai: Non-bank lender Piramal Capital, which had acquired Dewan Housing Finance in one of the few successful debt resolutions of a finance company, is set to raise up to $400 million in its first overseas bond issue, with Deutsche Bank, Barclays, Standard Chartered, Citigroup, and Emirates NBD leading the initiative. This debut bond follows a recent $100-million ECB loan, marking Piramal’s initial foray into international financing.
The roadshow kicked off Friday, with the lender’s management meeting investors in Singapore and Hong Kong over the next few days.
The company is looking to raise $300 million initially, potentially increasing to $400 million if demand is strong, adopting a conservative approach to better understand market dynamics.
Proceeds will support the company’s retail business, which has grown 50% annually over the past two years.
Spokesperson of Piramal did not respond to requests for comments, while Deutsche Bank, Barclays, Standard Chartered declined to comment. Citigroup and Emirates NBD could not be reached immediately for their responses.
Encouraged by the Reserve Bank of India’s (RBI) push for NBFCs to seek alternative funding beyond domestic banks, Piramal is exploring foreign capital pools. Currently, most of Piramal’s ‘55,000 crore borrowing is domestic, but the company is cautiously adding foreign debt to its portfolio to diversify the borrowing profile.
Piramal’s borrowings are diversified across NCDs, bonds (51%), loans (32%), and pass-through certificates (9%). This overseas bond issue will further diversify its funding sources.
Piramal did a non-deal roadshow in May and it garnered strong interest, reflecting global investors’ curiosity in the paper, said a source close to the development. “While foreign borrowings are more expensive due to taxes and hedging costs, they are expected to become an important, though not dominant, part of Piramal’s strategy,” the source added. The company’s average borrowing cost is around 8.8%.
This issue will serve as a benchmark for Piramal, with market response and pricing to be determined as the roadshow progresses.
Piramal Enterprises is merging with its subsidiary Piramal Capital and Housing Finance, renaming it Piramal Finance. The company is accelerating the rundown of its legacy wholesale book, reducing legacy AUM by 22% from Rs18,693 crore to ‘14,572 crore between Q3 and Q4 of FY24, which is at 20% of the AUM.
