Piramal Enterprises Ltd. met investors in Singapore this week in a non-deal roadshow organized by Deutsche Bank to test the waters for potentially issuing an inaugural public USD bond, two sources familiar with the development said.
The company is considering a bond issue in the next two months but has not specified a targeted issue size, the sources said. Piramal has so far engaged Deutsche Bank, Standard Chartered Bank and Barclays for the potential bond issue, the sources said.
Proceeds from the planned bond will be utilized primarily for onward lending, the sources said, adding that the company is already in discussions with credit rating agencies for the potential bond and the credit rating for the bond will factor in the ongoing merger between the company and its unlisted wholly owned subsidiary, Piramal Capital and Housing Finance Ltd., or PCHFL.
Merger
Piramal Enterprises
announced on May 8 that the company is in the process of merging with PCHFL, which will be renamed Piramal Finance Ltd. upon receipt of an NBFC Investment and Credit Company, or NBFC-ICC, license. Once the merger is completed, the new entity – Piramal Finance will be listed, the sources said.
Piramal Enterprises said in the May 8 announcement that in order to simplify its group structure and create a stronger, more flexible entity that enhances value for all stakeholders, the board of directors of the company has approved the merger. The proposed merger is expected to take around 9-12 months to complete, according to a May 8
presentation.
PCHFL is in process of submitting an application to the banking regulator, Reserve Bank of India, for conversion of its housing finance corporation, or HFC, license to an NBFC-ICC license, the presentation shows.
As per regulatory requirements, HFCs are required to comply with the Principal Business Criteria, or PBC, which includes
maintaining a minimum 60% of loans to housing finance and a minimum 50% of loans to individuals for housing finance, according to the presentation. PCHFL, by virtue of its current diversified lending profile, has not been able to fulfill this PBC requirement, the presentation shows.
As part of the merger consideration, Piramal Enterprises’ shareholders, for one equity share of the company, will get one equity share of Piramal Finance and one non-convertible non-cumulative non-participating redeemable preference share, or NCRPS, of INR 67 ($0.8) of Piramal Finance, subject to the Reserve Bank of India’s approval, according to the announcement.
PCHFL has been rapidly trying to reduce its riskier wholesale book and has brought down the percentage of wholesale loans in the total assets under management to 21% as of March 31, 2024 from 45% on March 31, 2023, according to the presentation.
Piramal did not immediately respond to requests for comment.