Private equity giant Blackstone will acquire Aadhar Housing Finance (AHFL) from the crisis-ridden Wadhawan Group for an undisclosed sum, a deal that will help the latter reduce its outstanding corporate debt.
Wadhawan Global Capital (WGC), the parent company to both AHFL and Dewan Housing Finance (DHFL), and Blackstone signed a definitive agreement on Saturday. As part of the deal, WGC will be selling its entire 70 per cent stake in the affordable housing finance company to Blackstone. DHFL, which holds a 9.15 per cent stake in AHFL, will also exit the company. According to sources, the deal value is estimated at about Rs 2,700 crore. Blackstone outbid Baring Private Equity and Hero Fincorp, which were also in the fray.
Commenting on the development, Kapil Wadhawan, chairman, WGC, said, “The transaction with Blackstone is part of our multi-pronged strategy to reduce the corporate debt levels and strengthen our balance sheet. The sale unlocks the latent value within the Group while reinstating our immediate and long-term focus on DHFL, the flagship company of Group.”
DHFL was looking to sell its non-core assets to free up some capital to ease liquidity concerns. The company had said it would infuse capital to the tune of Rs 2,000 crore by March 2019 to bring down its leverage from 9.27 to 7.5 times. The company’s shares came under pressure after a news portal alleged that it had diverted loans worth Rs 31,000 crore, though the company has denied the same. The ministry of corporate affairs has initiated an inquiry into the allegations.
The housing finance company was one of the worst hit when the beleaguered IL&FS group defaulted on debt payments and there was a situation of liquidity freeze in the sector. The December quarter results of DHFL revealed that its net profit declined 37 per cent to Rs 313.6 crore from Rs 495.4 crore in Q3 FY18. Loan disbursements saw a 95 per cent decline in the quarter as it disbursed merely Rs 510 crore.
AHFL was established in 2010. It merged with DHFL Vysya Housing Finance Limited (DHFL Vysya), another subsidiary of WGC, in November 2017. AHFL is also backed by the World Bank through the equity participation of International Finance Corporation. It has a 17 per cent stake in the affordable housing finance company.
In the first half of the fiscal year 2019, AHFL reported a profit of Rs 80 crore and assets under management of the company was to the tune of Rs 9,259 crore. Loans disbursed stood at Rs 1,943 crore and the gross non-performing assets were 0.67 per cent.