Piramal Capital plans another overseas bond issue in FY25 following USD 300 mn success

Non-bank lender Piramal Capital has raised USD 300 million in its maiden overseas bond issuance as part of its liability diversification strategy, a top official said on Wednesday.

The fund will be deployed for on-lending for focus segments like small businesses and affordable housing, which qualifies as 'sustainable finance' and helps the company meet the bond instrument requirements, the official said.

The cost of borrowing is higher for overseas bonds as compared with domestic alternatives. Despite this, the company will be eyeing another funding through a similar issuance in FY25, its Managing Director and Chief Executive Officer Jairam Sridharan said.

Sridharan said the lender currently depends on banks for 57% of its liabilities and also acknowledged a nudge from the regulator for the NBFCs to bring down the reliance.

Additionally, banks are also grappling with their challenges on deposit accretion which may impact credit supply, he added.

Sridharan said the overseas bond markets are large and deep, but the compliances are a bit heavy to access the markets and added this issuance opens up a new pipeline of funds for the entity.

After the issuance, the share of overseas bonds in the liabilities has gone up to 4% and the company is aiming to take it up to 13% in the next two years, he said.

There will be a small impact on the net interest margin because of this, he admitted but added that it will have to shift the asset composition to minimize the impact on the key profit metric.

Piramal Capital and Housing Finance hit the markets aiming to raise USD 300 million from sustainability bonds earlier this week, and got subscriptions of USD 1.4 billion, he said, adding that the final pricing was secured at 7.95%.

The company aims to raise another issue of a smaller size before the end of the fiscal, he added.

Piramal scrip was trading 0.50% down at ₹926.85 a piece on the BSE at 1410 hrs on Wednesday, as against a 0.72% correction on the benchmark.