Strategic investor for DHFL likely soon

The Wadhawans, promoters of Dewan Housing Finance Corporation, are planning to bring in a strategic investor to infuse equity into the company. Kapil Wadhawan, chairman, Wadhawan Global Capital, said there were already active discussions on bringing in a strategic investor.

“We want a strong strategic partner who cannot only add value but also alleviate concerns the market may have on the business and also bring in fresh equity and capital”

KAPIL WADHAWAN

Chairman, Wadhawan Global Capital

The Wadhawans, promoters of the troubled mortgage lender Dewan Housing Finance Corporation (DHFL), are planning to rope in a strategic investor to infuse fresh equity into the company. In an analysts’ call, Kapil Wadhawan, chairman, Wadhawan Global Capital (WGC), said there are already active discussions on roping in a strategic investor. The deal is likely to be finalised in 90 days. WGC is the promoter holding company of the group.

“We want a strong strategic partner who cannot only add value but also alleviate concerns the market may have on the business and also bring in fresh equity and capital,” Wadhawan said.

The promoter holding will be diluted in the expanded equity of DHFL. Talks for getting a strategic investor have gathered pace due to hostile market conditions after the Cobrapost expose.

Last week, media outlet Cobrapost alleged that DHFL had diverted loans worth ~31,000 crore, a charge the company dubbed “mischievous.” Also, in the third quarter, DHFL had to face market wrath over asset-liability risks after IL&FS group entities defaulted on payment of dues. Wadhawan said allegations of wrong doings in the loans against property are also not true as the company is holding on to strong securities. The board has appointed an external auditor to carry out a thorough probe and submit a report in three weeks and also one more auditor in a panel cleared by India Banks’ Association or IBA to assuage lenders’ concerns. The company is also seeking advice on how to challenge the allegations by Cobrapost legally, he added.

DHFL has taken strategic measures to tackle the changed market conditions. It plans to infuse fresh capital of around ~2,000 crore and monetise certain group investments by DHFL and its parent WGC. These steps are aimed at considerably reducing the gearing levels of DHFL to below eight times. Both companies have signed deals with Blackstone to sell over 70 per cent of their stake in Aadhar Housing Finance.

When asked if DHFL will split the retail and wholesale books, he said all options are open to enhance stakeholder value. “The plan, in the medium-term, is to become a large retail housing finance company rather than mix up both retail and bulk lending through project finance,” he said.