Warburg Pincus to acquire Avanse from DHFL, WGC

DHFL, WGC to focus on core business of housing finance, exit other lending

Dewan Housing Finance (DHFL) and Wadhawan Global Capital (WGC) will sell their combined 80 per cent stake in education loan company Avanse Financial Services to Warburg Pincus, the Americabased private equity group. WGC will be selling its entire stake of 49.04 per cent and Dewan Housing (flagship entity of WGC)will sell its 30.63 per cent stake. The money they will get has not been disclosed.

Dewan Housing Finance (DHFL) and Wadhawan Global Capital (WGC) will sell their combined 80 per cent stake in education loan company Avanse Financial Services to Warburg Pincus, the America-based private equity (PE) group.

WGC will be selling its entire stake of 49.04 per cent. So will Dewan Housing (flagship entity of WGC), which holds 30.63 per cent stake. The money they will get has not been disclosed.

This is part of an effort by DHFL and WGC to focus on their core business of housing finance and exit from other lending. They have already signed a pact to sell stake in Aadhar Housing Finance (AHF) to another PE entity, Blackstone.

Kapil Wadhawan, chairman of WGC, said: “The transaction with Warburg will allow the company (Avanse) to further strengthen in the education financing industry. This sale also unlocks the latent value within WGC Group, while reinstating our immediate and long-term focus on our core business.”

Avanse is an education-focused finance company; it began operating in 2013. A majority of its loan portfolio was created in the past two years.

Its assets under management increased from ~982 crore at end-March 2017 to ~3,134 crore as of end-September 2018. A little more than 80 per cent of the total portfolio is for a tenor of about 10

years, says Brickwork Ratings.

Ernst & Young and Prime Research & Advisory were financial advisors to the company and the sellers on this transaction. Shardul Amarchand Mangaldas & Co were the legal advisors.

As for the AHF transaction, WGC sold its entire 70 per cent stake to Blackstone. DHFL also exited, selling its entire 9.15 per cent stake.

DHFL was one of the worst hit when

the IL&FS group defaulted on its debt and there was a liquidity freeze in the sector. It was also hit by an allegation of funds being siphoned off.

An independent audit report, commissioned by its audit committee, has cleared it on allegations of routing money through shell companies. However, the report says some money might have been lent to entities for buying shares of a company floated by the promoters of DHFL.