Piramal Enterprises has formed a strategic alliance with Canada Pension Plan Investment Board (CPPIB) to provide rupee debt financing to residential projects in Indian cities.
Speaking to CNBC-TV18 about the rationale of this partnership, Ajay Piramal,Chairman, Piramal Group said that Canadian Pension Fund, which is one of the largest funds in the world wanted to increase its presence in India as they are positive on country’s long term story.
Piramal and CPPIB will initially invest USD 250 million each in the venture, which will focus on providing project-level debt to local developers across Mumbai, Delhi region, Bangalore, Pune and Chennai markets. Piramal added that the company has raised this amount through internal accruals.
The diversified Piramal Group had launched its financial arm in 2011 with a focus on the real estate sector.
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Below is edited transcript of Ajay Piramal’s interview with CNBC-TV18’s Manasvi Ghelani.
Q: Can you take us through the details of this alliance?
A: We have formed a strategic alliance with the Canadian Pension Fund. They will bring in USD 250 million and we are bringing in USD 250 million. So, USD 500 million fund will be investing in residential properties and in debt. Piramal Enterprises has been giving debt and structured debt in the real estate space for the last two and half years. So, this is just an extension of that. Canadian Pension Fund is one of the largest funds in the world. They want to increase their presence in India. They believe in the long term story of India. They believe that the values that we bring and they bring there is a lot of matching and that is why they are coming in.
Q: USD 250 million an which is an equal amount which Piramal will also putting in, what is the method for you actually raising this amount?
A: We have raised the amount. These are from our own internal funds - from Piramal's funds as well as the Canadian Pension Fund. They manage almost USD 200 billion in funds. So, they are allocating from their own fund.
Q: A lot of these pension funds and sovereign funds are looking at India story – 2013 though was not very great, we saw a lot of exits also. What really worked for this alliance? What really worked for you and for the Canadian Pension Fund and how did the alliance really happen?
A: The alliance happened because Canadian Pension Fund believes in the long term story of India. They believe that there is a good growth potential in India in spite of whatever may have happened in the last one or two years.
When they were evaluating India they looked at many companies and many groups to tie-up with and they found that in Piramal. We have the necessary matching in terms of values, culture and the track record that we already have got in investing in debt in real estate space, track record in meeting customer and stake holder expectations in the past. So, there was a good DNA matching between the two and that is why we have got together.
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