Piramal Enterprises will adjust exposure of Rs 3,164 cr of AIF in its financial services business
In accordance with Reserve Bank of India (RBI) guidelines, Piramal Enterprises has decided to adjust exposure worth Rs 3,164 crore in alternative investment funds (AIFs) in its financial statements through endowment funds or provisions.
The value of investments by Piramal Enterprises and Piramal Capital and Housing Finance in AIF units stood at Rs 3,817 crore as on November 30. However, of this, Rs 653 crore relates to funds that have no exposure to PEL debtor companies.
RBI on Tuesday banned banks and financial institutions from investing in AICBs where there is a downstream link or exposure to a debtor company. If the bank or NBFC has already had an exposure or loan to the debtor in the last twelve months, it cannot invest in an AIF that invests in the same company. RBI directed them to liquidate such assets within 30 days or maintain 100 percent provision for the same in case they miss the timeline.
“Of the remaining Rs. 3,164 crores, Rs. The AIF has made Rs 1,737 crore worth of downstream investments in three entities that are (or were in the last twelve months) debtor companies of PEL (Consolidated),” the company said in an exchange filing on Thursday.
The company said it was confident of a full recovery of the underlying downstream investments in the affected AIF units.
“PEL (consolidated) has received Rs. 905 crores insofar as repayment of interest and principal on these units is concerned,” the company added.
The company's shares were trading 2 percent lower at Rs 868 apiece at 10:30 am. Shares closed almost 8 percent lower on Wednesday.
PEL has consolidated net assets of Rs 28,710 crore (September end 2023) and capital adequacy of 31 per cent, the company said in the statement.
According to sources, members of the Indian Private Equity and Venture Capital Association – an industry body for AIFs – convened a meeting on Wednesday to discuss their comments on the RBI directive.
The RBI advisory followed concerns over greening of lending through AIBs – a pooled investment vehicle that invests in assets such as real estate, startups, private equity, MSMEs, venture capital debt, etc. The market regulator had shared the data on the possible circumventions of financial rules. industry standards to RBI.
First print: December 21, 2023 | 10:44 am IST