Piramal Capital aims for 10-15% overseas funding in 2-2.5 years: MD Sridharan

“Over time, I want to get to a point where 10-15% of our liabilities are coming from international borrowing in 2-2.5 years. Post this issue, the share is now at around 4%," Sridharan said in an interview. “To that extent we will want to do multiple issues in the future." 

“In the immediate term, in FY25, we will go one more time to tap out a little more of the demand that is left over." The second tranche is likely to be of $100-200 million, and will be raised over the next 3-4 months, Sridharan added.

The $300 million fundraising comprised fixed rate senior secured sustainability bonds, issued at a yield of 7.95% for a 3.5-year term. The company received 'BB-' rating from S&P and a 'Ba3' rating from Moody’s, both with a stable outlook. 

Standard Chartered Bank, Barclays and Deutsche Bank acted as joint global coordinators and joint bookrunners. Axis Bank, Citi and Emirates NBD also served as joint bookrunners. 

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On Tuesday, the bonds, listed on the International Exchange IFSC (India INX), received bids totaling around $1.3 billion, or over four times the $300 million issue size. On the listing day, the yield fell 15 basis points to close at 7.80%, reflecting strong investor interest.

“We issued only $300 million because we wanted to just establish the presence right now and open up the pipeline and then later on we can do more. We want to open up the international market as a source of capital. It felt like an area that we should tap." 

Sridharan noted that the issue was allocated to 115 different investors with the aim of diversifying the NBFC’s borrowing profile and reduce dependence on domestic markets.

“You have to assume a certain part of your liability stack is going to be higher priced compared to others, but we would prefer to keep a steady pipeline there so that in good times and bad we have access to capital. It’s an insurance policy to ensure that we don’t fall short at any point in time." 

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Piramal Capital's current borrowing cost is 8.9%, with incremental borrowing at around 9.25%. The cost for the overseas issue is estimated at 7.9%, plus hedging and other costs of about 2.5%.

This bond issue follows a ₹2,000 crore infusion from Piramal Enterprises in March 2024, and a recently concluded $100-million social impact loan with Standard Chartered Bank. 

The NBFC also plans to raise ₹500-1,000 crore through a domestic bond issue in the second half of the financial year, depending on interest rates and market conditions, Sridharan said.

“Our need on the retail lending side is extremely large so we will constantly need money. Every quarter we disburse ₹7,000-8,000 crore, so $ 300 million will very easily get absorbed in the retail business within the next month or two." 

Additionally, the accelerated fundraising aims to build liquidity buffers for the company ahead of the proposed merger with its parent, he added. This is especially important as liquidity of most NBFCs have fallen over the past 9-12 months.

“We want to increase our liquidity and bring it back up to have a slightly more liquid balance sheet. So, you will see us continue to raise money, both to fund growth and to improve overall liquidity." 

The NBFC aims to maintain four months of financial outgo as a liquidity buffer, Sridharan said.