DHFL gains 7 per cent upon report of stake sale
The shares of Dewan Housing Finance Corp gained 7 per cent on Monday after private equity firms Baring Pvt. Equity, Bain Capital and Hero Fincorp contemplated the purchase of stake in the debt-laden company. After losing out on Aadhar Housing Finance, these companies are now vying for stake in DHFL.
The promoters of DHFL aspire to sell 10 per cent stake through numerous avenues, including the open offer route.
The stock of DHFL struggled under selling pressure after a media outlet alleged that DHFL was diverting loans from Indian state banks to shell companies, including those associated with its controlling shareholders. DHFL has denied these accusations.
Towards the end of January 2019, the stock of DHFL took a hit after a news source accused the company of sanctioning loans worth Rs. 31,000 crore to questionable entities, who were quite possibly linked to its promoters, thereby rendering them ultimate beneficiaries. Further pressure was exerted on the stock after reports of a Ministry of Corporate Affairs investigation came to light.
The stock rebounded last week after DHFL’s CEO, Harshil Mehta resigned. However, he holds the designation of Executive President, Retail Business, w.e.f February 14, 2019. Meanwhile, the Chairman and Managing Director, Kapil Wadhawan has assumed the position of CEO. He will remain in position until a strategic partner assumes control. He will step down upon completion of the sale process.
Even before this news report was published, DHFL suffered a liquidity crunch like most NBFCs did after the news of IL&FS defaults made the rounds. The company's board employed an external auditor to conduct a probe into the allegations of unlawful activity. Management at DHFL believes that bringing in a strong strategic investor will help assuage concerns that investors may have about DHFL’s troubled position.
DHFL seeks to sell its life insurance, education finance and direct-selling agents business to raise capital.
The shares of DHFL rose 15 per cent on Thursday, after the CEO announced his resignation. On Monday, the shares opened at Rs. 125.90 per share, and hit a high and low of Rs. 135.40 and Rs. 125.00, respectively, At 12:07 pm, the stock was trading at Rs. 132.55, up 7.63 per cent.