Financial services group Centrum Capital is overhauling its business under its executive chairman Jaspal Bindra, former Asia-Pacific chief of Standard Chartered Bank. The new focus is on asset-led activities such as housing finance and loans to small and medium enterprises (SMEs). At the same time, it seeks to increase the flow of earnings from mainstay fee-based activities such as investment banking and syndication.
“We want to be a highly valued player in the market,” says Bindra.
Centrum’s activities include investment banking, equity & debt, wealth management, institutional broking, and foreign exchange.
The group plans to raise about $100 million to provide capital for two asset-side businesses. The company has adequate resources to fund these activities for the current financial year, says Bindra, but it will need capital in 2017-18.
Centrum’s shareholders have given their nod to raise capital equity up to Rs 1,000 crore through shares and convertible instruments. Its annual general meeting was held on September 30, 2016.
SME and housing finance businesses will be run through subsidiaries. Housing finance will be rolled out by December 2016. Centrum has already zeroed in chief executives to lead these two businesses. The recruitment for the next line of leadership is underway.
According to International Finance Corporation, the debt demand from SMEs in India is estimated to be Rs 9.9 lakh crore, which is 38 per cent of the total debt demand.
The government’s push for affordable housing projects, reduction in interest rates, and rising income levels are expected to contribute to the demand for finance.
Rating agency CRISIL expects housing loan disbursements to grow to Rs 8.30 lakh crore by FY20, aided by mortgage penetration, higher average ticket sizes and demand for affordable housing.
On a consolidated basis, Centrum Group’s total income stood at Rs 4,005 crore in FY16 against Rs 4,485 crore in FY15. Its consolidated net profit stood at Rs 31.2 crore in FY16 against Rs 53 crore the year before. However, this is not comparable because the FY16 figures are only for nine months, while the FY15 numbers are for full year.