The Piramal Group has sold residual bad loans worth ₹531 crore of its Advantage Raheja exposure, which includes properties such as a JW Marriott hotel in Bengaluru and a Crowne Plaza unit in Pune.
These loans have been sold to Omkara Asset Reconstruction Co., giving Omkara full ownership of all loans linked to this exposure. These loans, reflected as receivables in the form of security receipts (SR) on Piramal’s books, are now being sold for upfront cash.
The deal concluded recently was done at a premium, where Piramal made over ₹700 crore on the sale.
The loan had previously been sold to Omkara ARC, and the ARC made partial payments to Piramal both in cash and security receipts, which would be paid when the loans are recovered. Piramal recently put up for sale security receipts worth ₹531 crore, initially acquired by Omkara ARC for an all-cash payment.
Piramal had called bids and Omkara offered to buy the SRs in an all-cash deal at a premium. Therefore, Piramal sold the SRs from its book, said a source.
Piramal had earlier sold these loans in a structured deal. The loan sale was done in a 15:85 structure, with 15% paid in cash and the remaining issued as SRs. Here, Omkara ARC paid around ₹100 crore in cash and about ₹531 crore in the form of Security Receipts (SRs). SRs are financial instruments that are quasi-debt and paid to the lender by ARCs as they are recovered.
Spokespersons of both Piramal and Omkara did not immediately respond to requests for comment.
Piramal Enterprises and its subsidiary, Piramal Capital & Housing Finance, have been inviting bids for their real estate portfolio for the last several quarters to sell bad loans.
In a separate transaction, Piramal had also sold a loan outstanding pool worth ₹3,656 crore to Omkara ARC for ₹625 crore, resulting in a 17% recovery for the group.
Piramal’s current focus is on building a new asset-backed wholesale book known as ‘Wholesale 2.0’, particularly in real estate and corporate mid-market lending. This move involves cleaning up old NPAs and those acquired through the DHFL buyout. The company is focusing on resolving stressed loans and improving asset quality, which has led to a significant decrease in wholesale AUM over the last few quarters.
In line with their growth strategy, the management is looking to double the balance sheet over the next five years, primarily through a ‘retailisation’ approach targeting a 70% retail share by FY28. The company imposed tighter underwriting norms for the unsecured book segment in November 2022, given the industry’s increased leverage in this area.
