Tag: aum

MYRE Capital helps investors to acquire Rs 31cr office space in Mumbai; its AUM crosses Rs 100cr, BFSI News, ET BFSI

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New Delhi, MYRE Capital, which facilitates investors to have fractional ownership of commercial properties, has raised Rs 31 crore from high net-worth individuals for the purchase of nearly 18,000 square feet of office space in Mumbai and announced that its asset under management (AUM) has crossed Rs 100 crore mark. Mumbai-based MYRE Capital, which is a tech-enabled fractional ownership real estate platform, has been formed by architect firm Morphogenesis.

“We have raised Rs 31 crore from investors for the acquisition of 17,817 square feet office space in Times Square office complex at Andheri, Mumbai. Our asset under management has crossed Rs 100 crore and we are targeting to reach Rs 250 crore by March 2022,” MYRE Capital Founder and Chief Executive Officer Aryaman Vir told PTI.

On its platform, MYRE Capital had offered to investors the office space, which is leased to co-working operator Smartworks and further sub-leased to IFTAS, a fully-owned subsidiary of the RBI.

The office space, which has been acquired from Ajmera Group, is expected to generate a rental yield of 10.5 per cent and an Internal Rate of Return (IRR) of 13.6 per cent to investors.

NRI investors, chartered accountants, lawyers, and high salaried professionals have mainly invested in this round, he said.

“Achieving Rs 100+ crore AUM in 10 months further pushes us to expand our horizon and to contribute significantly to democratising fractional ownership of commercial real estate,” Vir said.

For expansion, he said the company is looking for more properties in major cities for offering to investors.

“Office assets will continue to remain high on the investor radar as mobility improves and a comeback to the physical office environment picks up,” Vir said.

He noted that the concept of fractional ownership, while at its nascent stage in India, has shown a tremendous shift in mindset among HNI as well as retail investors.

In June this year, MYRE Capital raised Rs 50 crore from investors for the acquisition of nearly 47,000 sq ft prime office space at Magarpatta Cybercity in Hadapsar, Pune. It has also facilitated acquisition of 3,000 square feet at Maker Maxity, BKC, Mumbai.

“Our portfolio has reached nearly 70,000 square feet now,” Vir said.

As per the business model of MYRE Capital, properties are being acquired into an SPV (Private Limited Company) and proportional stakeholding of the SPV is allocated to the investors.

MYRE Capital serves as the manager of the investors, the property, and the SPV.

Through its platform, investors can track their investments in real-time and access all relevant documents.

The tenant continues to pay rental to the SPV on a monthly basis, which in turn gets distributed to all investors proportionately by MYRE Capital.



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Manappuram Finance Q2 net profit declines at Rs370 crore

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Manappuram Finance Ltd has reported a consolidated net profit of ₹370 crore for the second quarter of FY 22. The profit is lower by 8.8 per cent compared to ₹ 405.44 crore reported in the year-ago quarter.

However, the company’s consolidated assets under management (AUM) grew by 5.7 per cent to ₹28,421.63 crore from ₹26,902.73 crores a year ago, and by 14.8 per cent in comparison to ₹24,755.99 crore reported in the preceding quarter (Q1).

Net profit for the standalone entity (which excludes subsidiaries) was at ₹355.00 crore against ₹405.56 crore in the year-ago quarter. Total consolidated operating income for the quarter amounted to ₹1,531.92 crore compared to ₹1,565.58 crores in the year ago quarter.

The Board approved payment of interim dividend of ₹ 0.75 per share with face value of ₹2.

V P Nandakumar, MD & CEO, Manappuram Finance Ltd said, “The key takeaway is the robust growth recorded during the quarter in our business volumes, be it gold loans, microfinance, or our home and vehicle loans portfolio. It reflects the emerging recovery in the rural and unorganized sectors of the economy and going forward we expect to sustain the growth along with improved profitability.”

The company’s gold loan portfolio stood at ₹18,719.53 crores, registering a strong growth of 13.2 per cent over ₹16,539.51 crores in the preceding quarter. The number of live gold loan customers increased from 24.1 lakh to 25.1 lakh in this period.

The subsidiary, Asirvad Microfinance ended the quarter with an AUM of ₹7,162.49 crore, a sharp increase of 44.1 per cent in comparison to ₹4,971.03 crore in the year ago quarter. The home loans subsidiary, Manappuram Home Finance Ltd., reported an AUM of ₹732.19 crore (₹620.62 crore in Q2 of FY2021) while its Vehicles & Equipment Finance division posted an AUM of ₹1,267.08 crore (₹1,062.28 crore in Q2 of FY2021). In aggregate, the company’s non-gold loan businesses account for a 34 per cent share of its consolidated AUM.

Average borrowing costs for the standalone entity declined by 67 basis points to 7.94 per cent during the quarter. The gross NPA (standalone) stood at 1.59 per cent with net NPA reported at 1.30 per cent The company’s consolidated net worth stood at ₹7,967.90 crores as of September 30, 2021. The book value per share was at₹94.14 and its capital adequacy ratio (standalone) stood at 31.84 per cent.

On a consolidated basis, the total borrowings of the company stood at ₹25,024.14 crores while the total number of live customers was 52.11 lakh as of September 30, 2021.

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Namdev Finvest eyes eight-fold AUM growth by March 2024

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Namdev Finvest Pvt Ltd (NFPL) is eyeing an eight-fold increase in its assets under management (AUM), to touch at least ₹2,000 crore, by March-end 2024 even as it expects the recent $4.7-million fund raise to lead to a rating upgrade.

Once the Jaipur-based non-banking finance company (NBFC) — which is focused on the micro, small and medium enterprises (MSME) sector — attains the targeted AUM, it will be better placed for co-lending tie-ups with large banks, its top officials said. Its current AUM value is about ₹270 crore.

Jitendra Tanwar, MD and CEO, said the company’s USP is providing funding on time to existing as well as new entrepreneurs in the MSME segment.

NBFCs: No need to press the panic button yet

“Our turnaround time is 7-10 days. So, within 10 days we disburse money to the customer.

“We also educate our customers about the importance of using banking facilities, as far as possible, avoid cash transactions, and route payments through digital payment apps,” he said.

Tanwar said NFPL encourages those at the bottom of the pyramid to start their business and grow it.

According to CARE Ratings, the NBFC’s loan portfolio is moderately diversified with the ‘loan against property’ portfolio and SME loans (secured) comprising 80 per cent, two-wheeler loans 16 per cent, new or used four-wheeler loans 3 per cent and gold loans 1 per cent.

NBFC regulation needs to be strengthened

NFPL received private equity investment (A series) of around $4.7 million in September 2021 from Belgium-based Incofin Investment Management, via its India Progress Fund.

The company, which has operations in Rajasthan, Punjab, Delhi and Gujarat, expects CARE Ratings to take into account the capital infusion when it updates its rating, which is currently at ‘BBB-’. An ‘A’ rating will help NFPL tap the debt capital market, said a company official.

On the importance of reaching the ₹2,000-crore milestone, PH Ravikumar, Director, said that co-lending becomes meaningful when there is a minimum monthly loan origination.

“When it comes to microfinance or MSMEs, the ability of specialised NBFCs like Namdev Finvest to spot, manage and contain the risk is much better than that of large banks. NBFCs have the skill sets, local focus, and local intelligence,” he said.

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HFCs’ AUM to grow 8-10 per cent in FY22 against 6 per cent in FY21: ICRA

Banking & Finance

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Housing Finance Companies’ (HFCs) growth is expected to pick up in the rest of FY2022 despite headwinds in the first quarter (Q1) of FY2022, but weak asset quality is likely to keep their profitability subdued, according to ICRA.

The credit rating agency estimated that HFCs’ portfolio is likely to grow by 8-10 per cent in FY2022 against 6 per cent in FY2021.

ICRA expects gross non-performing assets (GNPAs) to improve marginally from June 2021 level (of 3.6 per cent), but to stay elevated and higher by 40-70 basis points as on March 31, 2022, as compared to March 31, 2021 (of 2.9 per cent).

The agency opined that though the portfolio growth is expected to drive an improvement in revenue, the expected elevated credit costs are likely to keep the profitability subdued in FY2022.

Growth agenda back on the table: Ravi Subramanian, MD and CEO of Shriram Housing

ICRA observed that healthy demand in the industry, increasing level of economic activity and increasing vaccination in the country are expected to result in a steady growth in disbursements and improvement in collection efficiency (CE) in FY2022.

Covid impact

Sachin Sachdeva, Vice-President and Sector Head, Financial Sector Ratings, ICRA, said: “Overall on-book portfolio of HFCs in India is estimated at ₹11.0 lakh crore as on June 30, 2021, with exposures across home loans (HLs), loan against property (LAP), construction finance (CF), and lease rental discounting (LRD).

“The Covid-19-induced disruptions moderated the portfolio growth to 6 per cent in FY2021. Nevertheless, despite nil sequential growth in Q1 FY2022, aforementioned favourable factors provide hope for better growth prospects in FY2022 with an estimated growth rate of 8-10 per cent.”

FinMin allows small HFCs to take recourse to SARFAESI law

The agency noted that HFCs’ asset quality metrics weakened quite sharply in Q1 FY2022 because of the localised lockdowns imposed by various States/Union Territories (UTs) on account of the second wave, which impacted the borrowers’ cash flows and hence the CE.

“The jump in overdues was the sharpest in the recent past, as borrower-level liquidity got stretched in the absence of loan moratorium. The marginal borrowers, therefore, slipped into the NPA (non-performing asset)/overdue category in Q1 FY2022,” ICRA said.

Consequently, the Gross NPAs increased to 3.6 per cent as on June 30, 2021, from 2.9 per cent as on March 31, 2021 (2.3 per cent as on March 31, 2020).

Per the agency’s assessment, though the asset quality deteriorated across segments, CF was worst hit followed by LAP and HL. Thus, entities with high exposure to CF witnessed a higher impact than the industry average.

The headline asset quality numbers are expected to moderate slightly from current level as the trend in the CE continues to remain encouraging.

Nevertheless, ICRA expects a 40-70 basis points (bps) increase (net of recoveries and write-offs) in GNPAs by March 31, 2022, from GNPAs as on March 31, 2021, assuming there are no further Covid-19 induced lockdowns. One basis point is equal to one-hundredth of a percentage point.

Sachdeva said the pre-tax return on average managed assets (profit before tax/PBT per cent) for FY2022 is likely to remain similar to FY2021 level (1.9-2.0 per cent). Optimistically, if the collection efficiency trends post a steady and healthy revival and if slippages remain contained, then PBT per cent may also benefit from reversals in provisions.

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Aditya Birla Capital posts its highest quarterly profit of Rs 377cr in Jul-Sep, BFSI News, ET BFSI

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New Delhi, Aditya Birla Capital on Monday reported its highest ever quarterly profit of Rs 377 crore on a consolidated basis in July-September 2021 on the back of strong growth across its business verticals. The company had posted a consolidated net profit of Rs 264 crore in the same period a year ago.

The consolidated profit after tax (after minority interest) grew 43 per cent year-on-year, to Rs 377 crore, the highest level ever recorded by the company, Aditya Birla Capital Ltd (ABCL) said in a release.

The consolidated revenue of the company grew by 22 per cent to Rs 5,961 crore during the July-September period of 2021-22, as against Rs 4,885 crore in the same period of 2020-21.

The active customer base grew to about 28 million (2.8 crore), a 42 per cent year on year growth. “The company’s focus on building scale, growing its retail base and delivering consistent profitability, continues to yield results,” it said.

The overall asset under management (AUM) across asset management, life insurance and health insurance businesses grew by 24 per cent from a year ago to over Rs 3,70,290 crore as of September 30, 2021.

The gross premium across life and health insurance during April-September FY22 grew by 25 per cent y-o-y to Rs 5,685 crore, reflecting the scale in insurance businesses, it added.

The overall lending book of NBFC and housing finance at Rs 59,060 crore shows the scale of the lending businesses, ABCL said.

The company said it has raised over Rs 6,000 crore of long-term funds in the lending business in the first half of FY2021-22.

ABCL shares traded at Rs 98.85 apiece on BSE, up 2.17 per cent from the previous close.



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Mahindra & Mahindra Financial Services Q2 net profit up at ₹1,103 crore

Banking & Finance

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Mahindra & Mahindra Financial Services consolidated net profit surged by 212.9 per cent to ₹1,102.94 crore in the second quarter of the fiscal. Its net profit was ₹352.51 crore in the same period last fiscal.

However, its total income declined by four per cent to ₹2,951 crore during the quarter ended September 30, 2021, as against ₹3,071 crore during the corresponding quarter last year.

“During the quarter, the company increased its shareholding in Ideal Finance Limited (IFL), Sri Lanka from 38.2 per cent to 58.2 per cent. IFL is now a subsidiary of the company. This stake increase has resulted in revaluation of existing equity stake in IFL, which led to a one-time revaluation gain of Rs 21 crore, which is shown as exceptional item in the second quarter 2021-22 consolidated financials,” Mahindra Finance said in a statement on Thursday.

Disbursements grew by 61 per cent year on year on year to ₹6,475 crore in the second quarter of the fiscal. “But for the supply side issues, the disbursements would have grown further,” the company added.

It also reported improvement in collection efficiency month on month – 95 per cent in July, 97 per cent in August and peaking at 100 per cent in September.

The company has a restructured book of 1,04,130 contracts as on September 30, 2021 with an underlying AUM of ₹4,390 crore.

Out of these, 96,391 contracts are classified in Stage-2 as the company believes that the stress in these contracts is temporary, caused by second wave of Covid-19, Mahindra Finance said.

As collection efforts intensified, the gross non performing assets improved sequentially to 12.7 per cent as on September 30, 2021 from from 15.5 per cent as on June 30, 2021.

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Nation Pension System AUM likely to rise 30% to Rs 7.5 lakh crore by FY22, says PFRDA chairman, BFSI News, ET BFSI

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Pension Fund Regulatory and Development Authority (PFRDA) Chairman Supratim Bandyopadhyay on Friday said that the corporate sector is showing greater interest in the National Pension System (NPS), which may lead to an on-year 30% rise in assets under management (AUM) on year to Rs 7.5 lakh crore by FY22.

Other key takeaways from the speech

  • Total NPS corpus was at Rs 6.67 lakh crore as on September 25, 2021, up from Rs 5.78 lakh crore as on March 31.
  • Private individual enrolments (excluding Atal Pension Yojana) grew 35% on year to 18.28 lakh as on September 25, 2021, while corporate sector subscribers have shown 20% growth to 12.59 lakh during the period.
  • The Central government employee subscribers grew 4.4% on year to 22.24 lakh as on September 25, 2021, while state governments subscribers grew 10% to 53.79 lakh during the period.

Addition of new fund managers

PFRDA has recently given approval to two new entrants – Tata Asset Management and Max Life Insurance – into fund management of NPS. Axis Mutual Fund is also in the process of joining as a fund manager, Bandyopadhyay said.

Currently, there are seven fund managers – HDFC Pension Management, ICICI Prudential Pension Funds Management Company, Kotak Mahindra Pension Fund, LIC Pension Fund, SBI Pension Funds, UTI Retirement Solutions and Aditya Birla Sun Life Pension Management.

Individual Subscribers

In June, PFRDA permitted the engagement of individuals who are working as business correspondents or agents within their existing business structure for facilitating the distribution of pension schemes.

Bandyopadhyay said individual distributors would play a key role in the expansion of NPS among the masses. The regulator is also examining if the fees paid to distributors could be enhanced from the current rate of 0.25% of the contribution by a subscriber.

With longevity of life and working life going well beyond 60 years, the regulator has enhanced the entry age for NPS to 70 from 65 and exit age from 70 to 75 years, in all citizen and corporate schemes.



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Home loans set for a big boost this festive season, BFSI News, ET BFSI

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Home loans are set to get a boost this festive season as easing Covid curbs give buyers confidence and rates stay rock bottom due to ample liquidity

Buyers confident about the economy are set to cash in on low rates to buy homes.

Housing sales have jumped over two-fold during the July-September period at 62,800 units across seven major cities on better demand driven by low mortgage rates and hiring in IT/ITeS sector, according to property consultant Anarock.

Sales of residential properties stood at 29,520 units in the year-ago period and 24,560 units in the previous quarter.

Housing prices appreciated by 3 per cent across the seven cities to Rs 5,760 per square feet in Q3 of 2021 calendar year from Rs 5,600 per square feet in Q3, 2020.

The ongoing WFH (Work For Home) culture continues to influence residential sentiment on two major fronts – overall housing demand and unit sizes.

About 80 per cent of respondents to a survey by consultant JLL expected to make a purchase in the next three months.

Fierce competition

Competition among lenders in the home loan space is also set to boost home loans.

Kotak Mahindra Bank is offering home loans at a lower rate of 6.50 per cent is a festive period offer available only for two months till November 8, and the lowest offering is for those having the highest credit scores coming from the salaried segment.

In the past, its rivals which include HDFC and SBI, have responded to rate cuts by slashing their own offering. The rate cut comes at a time when demand for home loans is falling in the country and may spark similar offers from rivals.

Large banks like the State Bank of India already offer home loans at as low as 6.65 per cent and 6.75 per cent, respectively, while the interest rates for HFCs is between 7.45 per cent and 10 per cent.

Nirmal Bang Institutional Equities said in a note, “The demand momentum seen in housing loans last year has tapered off and organic growth for the housing finance industry has been softening,” the brokerage house said. The organic growth in the home loan segment for large banks has been slowing over the last 45-50 days.

Home loan AUM growth

Even as lenders jostle for home loan pie, the assets under management of the segment across banks and non-banks are likely to grow by 15% over the next three to five years, according to ICICI Securities.

This would be on the back of the rise in disbursements and improved affordability.

“Factors such as low interest rates, stamp duty cut, benign real estate prices, etc. have improved affordability to own a house. ‘Work from home’ has kindled incremental housing demand. Construction too was not adversely impacted during the second wave,” the brokerage said.

Home loan growth fell to 8% over the previous three financial years as compared to 17-18% earlier while disbursements fell to Rs 5.3-5.5 lakh crore due to the pandemic. However, it has now risen to a run-rate of Rs 7-8 lakh crore.



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IDFC board approves divestment of mutual fund business

Banking & Finance

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The Board of Directors of IDFC Ltd and IDFC Financial Holding Company Ltd (IDFC FHCL) at their meetings held on Friday considered and approved to initiate steps to divest the mutual fund business — IDFC Asset Management Company (IDFC AMC) Ltd.

IDFC AMC is the direct subsidiary of IDFC FHCL and indirect subsidiary of IDFC. As on March 31, 2021, IDFC held 99.96 per cent in IDFC AMC.

IDFC AMC’s average assets under management (AAUM) for the June quarter was at ₹1,26,070 crore, as per AMFI data.

IDFC, in a regulatory filing, said the disinvestment is subject to requisite regulatory approvals, as applicable.

The Boards have authorised respective Strategy & Investment Committees to take necessary steps, including appointment of Investment Banker, for the same, as per the filing.

IDFC losing investor confidence over delay in value unlocking

Investors upset

At a pre-annual general meeting conference call held on September 14, investors expressed disappointment with the slow pace of progress of the disinvestment.

While one investor wanted IDFC to immediately divest its stake in its asset management company (AMC), failing which he said he will reach out to other investors to seek a change in management; another investor, referring to the performance of the stock, alleged value destruction for shareholders.

RBI approves re-appointment of Vaidyanathan as IDFC FIRST Bank chief

Vinod Rai, Non-Executive Chairman, IDFC, explained that it has taken the company the last 3-4 years to try and simplify the entire corporate structure and it has managed to remove all the other entities, except the Bank, AMC and the Foundation.

“Now, what we are grappling with today is the IDFC Foundation. It has two joint ventures under it — one is with the Government of Delhi and another is with the Government of Karnataka.”

In his statement to the shareholders in the latest annual report, Rai observed that in pursuit of creating maximum value for shareholders, over the last few years the Board has been focused on cleaning up the corporate structure of the IDFC Group, while awaiting the expiry of the 5-year lock in period for the Group as promoter of IDFC FIRST Bank.

The Reserve Bank of India vide their letter dated July 20, 2021, has clarified that after expiry of the ‘lock in’ period of five years, IDFC can exit as promoter of IDFC FIRST Bank.

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Bank loans to NBFCs grow slower as credit to small lenders dries up

Banking & Finance

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Both banks and non-bank lenders reported a deterioration in asset quality during the April-June quarter in loan categories. (Representational image)

The growth in outstanding bank loans to non-banking financial companies (NBFCs) has slowed down significantly on a year-on-year (y-o-y) basis in 2021, according to data released by the Reserve Bank of India (RBI). Industry executives said that the phenomenon is a result of credit to smaller NBFCs drying up amid heightened caution on the part of banks.

Credit outstanding to non-bank lenders has been growing in the low single digits through much of the current year, with banks’ NBFC book actually shrinking 2.2% y-o-y in June 2021. The growth rate moved back into positive territory in July, though it remained at a muted 0.5%. This is in contrast to the 20-36% growth rates seen every month during the comparable period of 2020, when the pandemic first broke out in India.

NBFC industry executives said that liquidity is not a problem for the larger players, but smaller lenders have been finding it difficult to access bank loans. Ramesh Iyer, vice-chairman and managing director, Mahindra & Mahindra Financial Services, told FE that there is a need to look at the situation of smaller NBFCs to put things in perspective. “I’ve been hearing that small NBFCs are not able to get money from banks. That could be one reason (why credit growth is slower),” he said.

nbfc loan growth

Bankers admit in private conversations that they are being cautious while lending to some NBFCs, especially those who have faced difficulties with respect to collections during the pandemic. “Last year banks were being cautious because of Covid, but later we saw that NBFCs were able to manage well. The second wave has again made things difficult because collections were affected badly,” said a senior executive with a public-sector bank.

Both banks and non-bank lenders reported a deterioration in asset quality during the April-June quarter in loan categories where cash collections predominate. Gold loans, commercial vehicle (CV) loans and microfinance saw slippages rise in Q1FY22 as the second wave of Covid-19 hurt the collection effort. There was also no moratorium on repayments, unlike in 2020, which made the stress more evident on lenders’ books.

In a recent presentation, analysts at India Ratings and Research said that a trend of consolidation and polarisation is emerging in the NBFC segment, with AA+ and above-rated NBFCs growing their assets under management (AUMs) much faster than A+, A and A- rated non-banks. In terms of asset classes, NBFCs focused on real estate have seen their AUMs stagnating as a result of a funding crunch and other sector-specific challenges. In the first quarter of FY22, retail NBFCs also saw a drop in AUMs largely due to the second wave of Covid.

The rating agency also expects the funding environment for smaller microfinance institutions (MFIs) to remain challenging. “For most large MFIs (assets under management above Rs 5,000 crore or large sponsor backed), bank funding lines could continue and hence they may not face immediate liquidity stress. That being said, small and mid-size MFIs would need to conserve liquidity and hence their disbursements could be constrained, this could lead to lag in their performance,” India Ratings analysts said.

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