DHFL gets reg­u­la­tor’s ap­proval to sell PMS busi­ness, merge schemes

Port­fo­lio man­age­ment arm of DHFL Pramer­ica AMC will be part of Pru­den­tial Fi­nan­cial Inc

The Hindu Business Line - - MARKET RADAR - SURESH P IYENGAR

Cash-strapped De­wan Hous­ing Fi­nance Cor­po­ra­tion has re­ceived mar­ket reg­u­la­tor SEBI’s ap­proval to sell its port­fo­lio man­age­ment busi­ness to joint ven­ture part­ner Pru­den­tial Fi­nan­cial Inc of the US.

“We have re­ceived SEBI ap­proval for the pro­posed change in share­hold­ing in DHFL Pramer­ica As­set Man­agers for the port­fo­lio man­age­ment ser­vice,” said DHFL Pramer­ica PMS.

The pro­posed change in share­hold­ing once com­pleted will re­sult in the port­fo­lio man­ager be­com­ing part of US-based Pru­den­tial Fi­nan­cial Inc (PFI), the sec­ond-largest in­surer in the world with as­sets of over $1.4 tril­lion, and rank­ing 50th in the list of For­tune 500 com­pa­nies, it said.

In the wake of re­cent de­vel­op­ments af­fect­ing DHFL, PFI said that the port­fo­lio man­age­ment busi­ness does not have any debt or eq­uity exposure to DHFL and hence, is not im­pacted by the de­vel­op­ments.

“We ex­pect the pro­posed change in share­hold­ing to take place soon and in­vestors to re­ceive an in­ti­ma­tion on the same,” it said.

DHFL is also in the process of sell­ing its mu­tual fund busi­ness to joint ven­ture part­ner Pramer­ica and had signed a deal last De­cem­ber. Pramer­ica and DHFL formed the joint ven­ture for the mu­tual fund busi­ness in 2014.

In re­sponse to a Busi­nessLine query, a DHFL spokesper­son said: “We have re­ceived ap­proval for PMS, scheme merg­ers and are hope­ful to get ap­proval for sale of mu­tual fund by the month-end. Mu­tual fund has change in con­trol of AMC and spon­sor, while PMS is only change in con­trol of sta­tus.”

Fall in as­set size

In May, DHFL Pramer­ica Mu­tual Fund de­cided to merge two of its schemes after their exposure to its spon­sor De­wan Hous­ing Fi­nance had risen sharply due to fall in as­set size.

With as­sets of just ₹13 crore as of April-end, the Float­ing Rate Fund had an exposure of 31.9 per

DHFL is also in the process of sell­ing its mu­tual fund busi­ness to joint ven­ture part­ner Pramer­ica

cent of its as­sets to DHFL. Be­fore the IL&FS cri­sis in Septem­ber, the fund’s size was ₹640 crore and exposure to DHFL was 6.58 per cent.

Sim­i­larly, the Medium-Term Fund with as­sets of ₹34 crore had 37.41 per cent exposure to De­wan Hous­ing Fi­nance’s debt pa­per and 47.28 per cent to In­di­a­b­ulls Hous­ing Fi­nance. The fund had seen over 90 per cent fall in its as­sets to ₹34 crore from ₹437 crore at Au­gust-end. In Au­gust, the scheme’s exposure to De­wan Hous­ing Fi­nance and In­di­a­b­ulls stood at 9 per cent and 5.7 per cent, re­spec­tively.

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