Indiabulls Housing Finance in talks with PEs to sell 15-20% stake

Investor to become single-largest shareholder; Sameer Gehlaut likely to step down as promoter

Indiabulls Housing Finance has begun talks with a few private equity (PE) investors such as Apollo Global, TPG, and Brookfield for selling a significant stake. The deal value is being pegged at Rs 2,000 crore. Sources in the know said due diligence is expected to gather momentum in April. 

The new investor will become the single-largest shareholder of Indiabulls Housing, having at least two to three members on the board and will also participate in its day-to-day functioning. Emails to Indiabulls Housing remained unanswered till the time of going to press.

In an important precursor to the transaction, Indiabulls Housing would reduce its wholesale loan exposure, which accounts for almost 30 per cent of its loan book of Rs 73,000 crore. Since April last year, the shadow lender has reduced its wholesale exposure by around Rs 5,000 crore. It recently concluded a deal with Oaktree Capital for Rs 1,000 crore, and another Rs 500-1,000 crore of wholesale exposure is expected to be rundown in the coming week.

With the change of guard, it is also gathered that Sameer Gehlaut, the promoter of Indiabulls Housing, may reclassify his holding as ordinary shares. Gehlaut recently stepped down as the executive chairman of Indiabulls Housing to take up key managerial responsibilities at Indiabulls Ventures (now renamed as Dhani Services Limited).

While as of September 2020 Gehlaut held 21.7 per cent in Indiabulls Housing, a communication from the Securities and Exchange Board of India (Sebi) dated December 8, 2020, exempting Sameer Gehlaut IBH Trust from making an open offer following its proposed acquisition of shares in Indiabulls Housing, noted his stake at 15 per cent in the company. Sources said Gehlaut might retain his stake at these levels even after de-promoterising his shares.

Recently, former Reserve Bank of India deputy governor SS Mundra was elevated to the position of non-executive chairman of Indiabulls Housing, and former MD & CEO of Bank of India Dinabandhu Mohapatra was appointed independent director. Gehlaut is current non-executive director of the company.

Even when talks for a merger were ongoing with Lakshmi Vilas Bank back in August 2019, Gehlaut had offered to pare his holdings in the company and rescind his position as promoter. By virtue of de-promoterising, Gehlaut will not seek any privileges normally available to promoters, including having his representatives in Indiabulls Housing’s board.

In November last year, Sebi had proposed to change the minimum threshold required for reclassification of promoters as public shareholders from the present 10 per cent limit to 15 per cent. Final guidelines are awaited.