Expanding its bouquet of offerings in the financial services business, Essel Finance Advisors & Managers is set to add three more verticals to its portfolio in the coming months.
A part of the $8 billion Essel Group, the company already has a real estate private equity business and will add a non-banking financial company (NBFC), investment banking (IB) advisory and another vertical that will focus on fundraising for corporates.
In a chat with dna, Amitabh Chaturvedi (pictured), managing director, Essel Finance, said, “The NBFC vertical will be functional by mid-April and by the same time our IB advisory and fundraising business for corporates will get operational too. The three verticals will certainly get added by April-May this year.”
While the overall plan is to set up all the verticals in financial services business over the next 3-5 years, the company will not get into banking and life insurance as they are capital intensive businesses.
“Our focus in the initial years will be to set up businesses that will give us fee income and require less capital. Having said that you will certainly see Essel Finance getting into all the businesses in five years,” he said.
Essel Finance will be positioning itself in the league of companies like L&T Finance, Reliance Capital and Aditya Birla Financial Services over the coming years.
“Going forward, depending on the shareholders’ comfort, internal approvals and stage of the businesses that we have already launched, you might see us getting into business verticals like mutual funds, wealth management, housing finance, micro finance, money transfer, white-label ATM, credit card, etc,” said Chaturvedi.
The company has also applied for a fund management licence in Singapore a month ago. Once it receives the licence, Essel Finance expects international institutional investors to come in the offshore fund to be advised by the company.
“The plan is to mobilise $200 million from multiple investors and this fund should also be up and running by March,” he said, adding the focus would be on residential real estate projects that require last-mile funding wherein the developer has completed 60-65% of the project.
“Even if one make provisions for the foreign exchange cover, the investor will make 12-13% in terms of returns annually. Talks are on with investors in Singapore, Dubai, London and Zurich for the offshore fund,” said Chaturvedi.
On the company’s existing business operations, the real estate private equity (PE) fund has already invested Rs135 crore across two projects in Mumbai and Gurgaon. By March 2014, the company will have a corpus of `500 crore (domestic fund raise) in the PE fund to be invested only in urban residential real estate projects in top cities.
“We have also done syndications worth Rs400 crore odd. There are opportunities like the one in Bangalore, wherein the developer wanted Rs 90 crore. We got an investor to place the money with the developer and earned a substantial fee income. So there are deals where we are not blocking our capital, some one else makes the investment and we get a fee income,” said Chaturvedi.
The company is also in the process of setting up a Shariah fund and has had initial discussions with a Dubai-based investment banking firm.