Aadhar Housing Finance and DHFL Vysya Housing Finance receive NHB nod for merger, valuation details being worked on
Dewan Housing Finance Ltd (DHFL) group firms Aadhar Housing Finance and DHFL Vysya Housing Finance, which have received NHB nod for a merger, are likely to get additional funding from International Finance Corp, which is an existing investor in Aadhar.
"IFC has a plan to infuse capital. The amount is not decided and depends on the valuation, which we are working on," said Deo Shankar Tripathi, chief executive officer of Aadhar Housing Finance.
IFC, an arm of the World Bank, currently holds 20% stake in Aadhar Housing.
Wadhawan Group's flagship entity DHFL and the group's holding company Wadhawan Global Capital held 12.37% and 65.06%, respectively, as on March 31. The promoters had a 2.57% stake, while the remaining 20.0% was with IFC.
Recently, Aadhar had received Rs 50 crore capital infusion in the third quarter of FY17, with Rs 40 crore coming from Wadhawan Global and IFC putting in Rs 10 crore to maintain its stake at 20%.
In the combined entity, IFC would try to maintain equity stake of 17-18% and might infuse additional capital for that, Tripathi indicated.
"Post-merger, the holding of the promoters would be 82%. The rest 18% would be held by IFC and other institutions holding 2-3% in DHFL Vysya," he said.
"We got the approval from the National Housing Bank in May and had applied to the NCLT (National Company Law Tribunal) two months back. NCLT has called a meeting of the creditors in July. We expect to receive the approval before the Independence Day," Tripathi said at a press conference to announce the expansion of the company's network in the east.
Following the merger, the new entity would have a branch network of 270. As on March 31, the combined loan book of both the entities stood at Rs 5,100 crore, consisting of Aadhar's Rs 3,300 crore and DHFL Vysya's Rs 1,800 crore.
The merger would complement Aadhar's presence in the west with Vysya's strength in the southern markets.
"Crisil believes the merger would result in an affordable housing entity with a pan-India presence and higher operating efficiency. Post-merger, the strategic importance will be enhanced as the merged entity will strengthen the group's competitive position in the low-cost housing finance sector," the rating firm said in a statement on Tuesday.
...& ANALYSIS
- IFC, which holds 20% in Aadhar Housing, may invest in the combined entity to maintain stake of 17-18%
- The merger would complement Aadhar’s presence in the west with Vysya’s strength in the south
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Recently, Aadhar had received Rs 50 crore capital infusion in the third quarter of FY17, with Rs 40 crore coming from Wadhawan Global and IFC putting in Rs 10 crore to maintain its stake at 20%.
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