Piramal Enterprises Confident on AIF Investment Recovery - Business Standard

New Delhi, Dec 21 (PTI) Piramal Enterprises Ltd (PEL) on Thursday said it is confident of recovery of the underlying downstream investments in the impacted Alternative Investment Funds (AIFs) following RBI guidelines earlier this week.

As of November 30, 2023, the value of investments by PEL and Piramal Capital & Housing Finance Limited in AIF units was Rs 3,817 crore.

In a regulatory filing, Piramal Enterprises said Rs 653 crore of this pertains to funds that have no exposure to any debtor companies.

Of the remaining Rs 3,164 crore, Rs. 1,737 crore worth of downstream investments have been made by the AIF into three entities that are (or were in the last 12 months) debtor companies, it said.

"Taking a conservative view of the regulatory intent, PEL intends to adjust the entire Rs 3,164 crore in our financial statements through capital funds or provisions. We are engaging with relevant stakeholders to finalize the details," it said.

According to a brokerage firm Emkay report, PEL will be providing for this entire Rs 3,160 crore; as a result, FY24 reported P&L should see a material impact and estimated losses would be Rs 2,200 crore in FY'24.

Earlier this week, the Reserve Bank barred banks and NBFCs from investing in any scheme of Alternative Investment Funds (AIFs) having investment in companies that have taken loans from the lenders concerned in the past 12 months to curb the “evergreening” of loans.

Banks and NBFCs, which are Regulated Entities (RE) under the Reserve Bank of India (RBI), make investments in units of AIFs as part of their regular investment operations.

Further, it has directed lenders that such investments would be required to be liquidated within 30 days.

IIFL Finance in a separate filing said there is an Investment of Rs 21.37 crore in IIFL Fintech fund where the company has outstanding debt exposure of Rs 3.28 crore in one of the downstream investments of the fund.

The material subsidiary of the company IIFL Home Finance Limited holds investments of Rs 161.07 crore under 'Priority Distribution Model' which if not liquidated would require a 100 per cent deduction from its capital, it said.

However, the subsidiary is adequately capitalised having a capital adequacy ratio of 47.55 per cent as of September 30, 2023, and the impact of this deduction would reduce this to 46.39 per cent if reinstated as of September 30, 2023, reflecting a marginal impact of 1.16 per cent.