Dewan Housing may buy Deutsche Bank's Indian arm

Deutsche Postbank AG, the German lender being acquired by Deutsche Bank AG, is close to selling its Indian operations for about Rs 1,100 crore ($240 million), according to a person with direct knowledge of the matter.

Dewan Housing Finance Corp, based in Mumbai, is the frontrunner to buy Deutsche Postbank Home Finance and the talks are at an advanced stage, said the person, who declined to be identified before an announcement.

Shares of Dewan climb
The purchase would boost Dewan’s outstanding loans by more than 40 per cent, helping narrow the gap with larger rivals including the Housing Development Finance Corp. Deutsche Postbank is selling the unit, which has a market share of about two per cent, as the Bonn-based lender cuts spending and bolsters capital while combining operations with Germany’s largest bank.

“Many international players got into India because of the India growth story as expansion in their domestic markets slowed, said Jagannadham Thunuguntla, strategist and head of research at SMC Global Securities in New Delhi. “While the growth story is definitely on, it is not as fast as anticipated.”

Postbank spokesman Joachim Strunk in Bonn and Dewan Housing Chairman Kapil Wadhawan declined to comment.

Shares of Dewan Housing rose 0.3 per cent to Rs 275 as of 10:34 am local time in Mumbai trading, after earlier climbing as much as 3.9 per cent. The stock has gained 46 per cent this year, compared with a 28 per cent advance in Housing Development Finance.

Advisers on sale
Standard Chartered is advising Postbank and Rothschild is advising Dewan, the person said.

New Delhi-based Deutsche Postbank Home Finance had outstanding loans of Rs 4,800 crore as of September 30, and profit of Rs 39 crore for the previous six months, Crisil, the Indian arm of Standard & Poor’s, said on October 21. The unit has a market share of 1.5 to two per cent, it estimated.

Dewan Housing posted a profit of Rs 109 crore for the six months ended September 30, while its outstanding loan book was at Rs 11,145 crore, according to an investor presentation on its website.

On November 29, Frankfurt-based Deutsche Bank said it had increased its stake in Postbank to about 52 per cent following an offer to buy shares from minority investors, allowing it to integrate the retil lender this year.