In a move that may see change in ownership and management control at the troubled housing finance company DHFL, two sources close to the development have confirmed that Piramal Group and Baring Private Equity are in advanced stage of negotiations to acquire majority shareholding in DHFL.
Earlier this month, DHFL chairman and MD, Kapil Wadhawan had said that the company has engaged with large potential entities to identify and on-board the right strategic partner and are in advanced stages of discussions to achieve the same over the next 90 days.
Sources, however, confirmed that currently discussions with Piramal Group and Baring Private Equity are at advanced stage of negotiation and it is not just for entry as strategic partner.
“It may not be limited as a strategic partner but the talks are on for change of ownership,” said the source.
While emails sent to DHFL and Baring PE did not elicit any response, Piramal Capital & Housing Finance, said, “We would not like to comment on market speculations.”
As of December 2018, the promoters owned 39.21 per cent stake in DHFL. DHFL has been facing liquidity pressure since the IL&FS crisis hit the NBFC sector in September 2018. A series of debt defaults by IL&FS had spiralled into a broader liquidity crisis for the markets which is now somewhat abating but put pressure on several NBFCs.
DHFL faced severe liquidity issue since September and facing stress to honour its debt repayments it started raising funds and also selling its subsidiaries.
Following the stress, share price of DHFL came under huge pressure since September and it has fallen from a level of around Rs 670 in early September to close at Rs 136.4 per share on Wednesday. It has seen a decline of almost 80 per cent during the last 7 months.
DHFL group has been selling its subsidiaries to deal with the crisis.
Earlier this month, DHFL and Wadhawan Global Capital announced sale of about 80 per cent combined stake in education loan company Avanse Financial Services Ltd to private equity major Warburg Pincus.
This was part of the DHFL promoters plan to reduce outstanding debt. Last month, Wadhawan Global Capital sold its entire 70 per cent stake in Aadhar Housing Finance to Blackstone.
DHFL also exited the affordable housing finance company by selling its entire 9.15 per cent stake.
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