“DHFL promoters are looking to sell a 10% stake to strategic investors through various ways, including an open offer,” said one of the persons. “PE firms including Bain Capital, Baring India and Hero Fincorp are likely to bid after they lost out on Aadhar Housing Finance.”
The DHFL stock had plummeted after a news portal accused it at the end of January of giving loans worth Rs 31,000 crore to “dubious” entities linked to the promoters, who were the ultimate beneficiaries.
Reports of a ministry of corporate affairs investigation added to the pressure. The stock rebounded last week after the company said that Harshil Mehta was resigning as CEO.
“Kapil Wadhawan has taken additional charge as CEO and he will remain in the position until a strategic partner comes in,” said one of the persons cited above. “He will step down once the sale process is concluded.”
Even before the news report, DHFL had been hit by the liquidity woes that affected non-banking finance companies (NBFCs) in the wake of default by Infrastructure Leasing & Financial Services (IL&FS). The DHFL board has appointed an external auditor to carry out a probe into the allegations of wrongdoing.
Aadhar Housing Finance, the affordable housing finance arm, was sold to Blackstone for about Rs 2,700 crore, ET reported on February 2, to ease liquidity pressure. DHFL is looking to sell its life insurance, education finance and direct selling agents business to raise capital.
Baring didn’t respond to queries. Bain Capital and Hero Fincorp could not be reached for comment. Holding company Wadhawan Global Capital Ltd owns 37.3% in DHFL, BNP Paribas owns 4.65%, Life Insurance Corporation of India (LIC) 3.44% and Lazard Emerging Markets Small Cap Equity Trust 1.44%.
After the allegations of wrongdoing in the developer loan segment surfaced, Wadhawan said DHFL was looking to rope in a “strong strategic investor” to ease concerns that the other investors may have about the troubled company.
Having quit as CEO, Mehta holds the designation of executive president, retail business, with effect from February 14. The board has recommended the appointment of Sunjoy Joshi as an independent director and Srinath Sridharan as a non-executive director following the change in leadership.
Shares of Dewan Housing Finance Corporation rose 15% on Thursday after the announcement of the CEO’s resignation. The stock, however, closed 3.71% lower at Rs 123.15 on BSE on Friday.