Ajay Piramal, chairman of Piramal Group. (Photographer: Dhiraj Singh/Bloomberg)

Tycoon's Mortgage Lender to Seek Foreign Cash Amid India Squeeze

(Bloomberg) -- Indian billionaire Ajay Piramal’s home finance firm is set to tap overseas markets for funds, as hurdles mount for such non-bank lenders to raise money at home after landmark defaults by IL&FS group.

The tycoon’s Piramal Capital & Housing Finance, which provides services including mortgages to individuals and real estate financing, is firming up plans to raise "sufficient capital" through external commercial borrowings and bond markets.

"We will look at raising funds in the near future from ECBs, bonds and institutions," Piramal said in an interview in Mumbai without giving more details. "We will raise sufficient funds to meet our growth needs and bring down our exposure to short-term debt like mutual funds and commercial paper significantly."

Indian money-market funds, which gained popularity due to the higher yields offered over savings accounts, suffered the worst withdrawals since at least April 2007 last month, after defaults by infrastructure lender IL&FS spooked the market.

The next few months also present a challenge to non-bank financial companies looking to roll over debt. Funding costs have spiked as these financiers must pay a near record 1.2 trillion rupees ($16.3 billion) of commercial paper in October-December to mutual funds, according to data from Securities and Exchange Board of India.

©2018 Bloomberg L.P.