MUMBAI: Piramal Enterprises will continue to look for acquisition opportunities in general insurance after dropping out of the race for Reliance General Insurance, the company’s chairman Ajay Piramal said.
Last year, Piramal was one of the bidders for Reliance General Insurance, a subsidiary of Reliance Capital, which is undergoing bankruptcy proceedings. Piramal dropped out, leaving the ground for others who bid for the whole group, with IndusInd Holdings emerging as the highest bidder.
On Tuesday, Piramal Enterprises shared its plans to double the loan book by 2028 with analysts. However, some analysts felt that projections did not promise major growth, and the shares closed nearly 4% lower after rising 36% in four months. Speaking to TOI, Ajay Piramal said the company has taken a conservative approach in its growth projections. He said that the buyback of shares did not indicate that growth would be modest.
“Our net worth stands at Rs 31,000 crore, making us the third-largest NBFC based on this metric alone. Additionally, our debt-to-equity ratio is 1.2. Should we double our assets within the next four years, our present capital would be sufficient. The buyback was to reward shareholders. Hence, the promoters have opted not to participate in the buyback process,” he said.
Responding to whether Piramal Enterprises would look at the acquisition route for a small finance bank licence, Piramal said, “We have actively pursued acquisitions as a strategic approach. We will assess any opportunity that aligns with our objectives, and explore all acquisition opportunities in retail and wholesale lending.”
Piramal said that while the company looked at diversification, it would be largely within retail lending with a primary focus on affordable housing. “Over time, approximately half of our portfolio will be dedicated to affordable housing, where we hold a leadership position. Additionally, we’ll engage in loan against property (LAP), auto loans, and other unsecured lending,” said Piramal. He said that 70% of the company’s future business would be in retail.
The company also has a life insurance joint venture with Pramerica, which it inherited after acquiring the bankrupt DHFL. This company would not be requiring much capital, Piramal said. “Our approach within the retail sector combines a high-touch and high-tech model. Since the acquisition of DHFL, our field staff has expanded from 2,500 to 13,500 employees. We are actively venturing into tier-2 and tier-3 locations, addressing areas typically overlooked by banks,” he said.
