India's Piramal to provision for AIF exposure as cenbank tightens rules

Piramal Enterprises

21/12/2023 05:39

BENGALURU, Dec 21 (Reuters) - India's Piramal
Enterprises  PIRA.NS  said on Thursday that it will set aside
provisions for certain exposures to investments in alternate
investment fund (AIF) units, two days after the country's
central bank tightened rules governing such holdings.
    The Reserve Bank on India (RBI) on Tuesday barred all
entities under its regulation, including banks and non-banking
finance companies, from investing in alternate investment funds
that have investments in borrowers in the past 12 months. 
    As per the RBI's direction, regulated entities must
liquidate their investments in AIFs within 30 days should the
fund invest in an existing borrower. Failure to comply mandates
the entity to make full provisions on these investments. 
    As of Nov. 30, the value of investments made by the company
and Piramal Capital and Housing Finance in AIF units was 38.17
billion rupees ($458.78 million), it said in a filing. 
    Within the AIF investments, 6.53 billion rupees is
attributed to funds with no exposure to debtor companies of
Piramal Enterprises, the firm said. 
    Of the remaining 31.64 billion rupees, 17.37 billion rupees
are invested in three entities that served as debtor companies
of Piramal Enterprises in the last 12 months. 
    The company intends to adjust the remaining 31.64 billion
rupees through capital funds or provisions and is engaging with
relevant stakeholders to finalise the details, it said.
    Jefferies estimates Piramal's AIF exposure to be 7% of its
assets under management and said provisioning for it could lead
to a 10% hit to its net worth. 
    Piramal is confident of a full recovery of its investments,
it said.
    Shares of Piramal Enterprises fell 2.33% on Thursday. 

($1 = 83.1990 Indian rupees)

 (Reporting by Hritam Mukherjee in Bengaluru; Editing by Dhanya
Ann Thoppil)
 ((Hritam.Mukherjee@thomsonreuters.com; X: @MukherjeeHritam;))