AION Capital may not pick up equity stake in cash-strapped DHFL

The move by AION could affect promoter Kapil Wadhawan’s search for a strategic investor in the firm
Private equity fund AION Capital, a joint venture between ICICI Venture and Apollo Global Management, is in talks to buy the retail loan portfolio of Dewan Housing Finance Company Ltd (DHFL), and is not keen on picking up an equity stake in the financially strapped firm.

 

The move by AION, which, along with Cerberus Capital, is one of the key private equity funds interested in investing in DHFL, could affect promoter Kapil Wadhawan’s search for a strategic investor in the company.

 

Both are funds specialising in stressed assets.

 

An equity cash infusion will help the company partly, to get out of the crisis. Wadhawan is ready to dilute his stake, which is at 39.2 per cent, so that the strategic investors get joint or majority control.

 

However, it is looking at rustling up Rs 7,000-8,000 crore from the deal, which assumes a huge premium on the traded shares, whose market cap on Tuesday was Rs 1,588 crore.

 

A spokesperson of AION Capital declined to comment on the issue. An e -mail to Cerberus Capital, which is the other PE player in discussion with DHFL, did not respond to a query on whether they were only interested in the company’s loan portfolio. A spokesperson of DHFL also did not comment on the issue. Earlier even Barings had made it clear that it was not interested in taking a stake in the company but were willing to consider buying its retail loan assets.

 

DHFL has an attractive loan portfolio which currently stands at Rs 37,000 crore after it has sold about Rs 41,000 crore to banks to pay off its repayments. It’s wholesale loan portfolio is of Rs 30,000 crore and talks are on with PE funds Oaktree to pick a part of this portfolio. “Many of the PE funds are focused on taking over the company’s loan portfolio especially the retail part, however a deal will depend on completion of due diligence and also the price. As many of them like AION and Cerberus are PE funds involved in stressed assets the value of the deal is important. Most of them are not keen to take a stake in the company which has many complex issues to resolve,” says a source in the know. The challenge for DHFL is that that it is difficult for them to find “strategic Indian investors” as they are not flush with cash to put money, unlike PE funds.

 

The lenders who just recently signed an inter-creditor agreement and have given DHFL seven days to prepare a resolution plan which has to be presented this Monday. Under the resolution plan on the works DHFL will ask for a fresh line of credit of between Rs 1,300 crore and Rs 1,500 crore every month to start fresh disbursements of loans. It will also seek extension in its loan book between eight months to three years. The discussion on getting in a strategic investor however will follow only after the resolution plan is finalised.

 

The housing company which released its unaudited results reported a standalone net loss of Rs 2,233 crore in the quarter ending March 2019, which led to the shares plunge by 29 per cent on Monday.

 

The two statutory auditors, Deloitte Haskins and Sells and Chaturvedi & Shah, on June 6 sought additional information from the company to reconcile its annual results for the 2019-20 financial year, invoking Section 143 of the Companies Act.

 

Under the rules, the company has to reply to the queries in 45 days, or by July 21. The audit committee of DHFL in its board meeting asked the management to provide the audited financial results by July 22. 

NSE removes DHFL from F&O

 
BS Reporter

The National Stock Exchange (NSE) has expelled DHFL from the futures and options (F&O) segment. The exchange has said no fresh contracts  shall be introduced after the expiry of September 2019 contracts. The move comes after a 75 per cent drop in shares of DHFL so far this year.



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