HDFC acquires 2 housing finance cos

HT has now become a 100 per cent subsidiary of HDFC. GRUH was initially promoted by International Finance Corporation (Washington), His Highness Aga Khan, HDFC and the Gujarat government. HDFC which had a stake of a 28 per cent stake in the company will be increasing its stake to 54 per cent, making it a subsidiary of the company.

Addressing a press conference on Tuesday, HDFC chairman Deepak Parekh said: "HT has a major presence in the eastern market where HDFC’s presence is comparatively low. HT has 21 branches and 98 per cent of its business comes from individual home loans." The total consideration paid for HT was Rs 50.01 crore at Rs 33 per share. The book value of the company is Rs 16. “Internationally the valuations in housing finance companies vary from 1.5 to 3 times the book value of the company,” Parekh added. The non-performing assets of HT were at one per cent and the capital adequacy ratio 30 per cent.

GRUH was acquired for a consideration of Rs 9.99 crore, at the rate of Rs 14.50 per share. With these sell-offs, GACL will be getting out of retail housing loan sector and will focus on its core business cement. GRUH has 24 branches located in Maharashtra and Gujarat and around 92 per cent of its business is from individual home loans. The company had sanctioned some loans four years ago to developers and builders. But with the downturn in the industry also hit the company. GRUH has Rs 20 crore NPAs in its bulk loans where as for individual loans the NPAs were less than half per cent.

“In an increasingly competitive market, size brings with it economies of scale which will ultimately benefit the customers. It will result in better utilisation of delivery channels. The acquisitions by HDFC will help it to increase its distribution strength and to deliver services and products to a large customer base more efficiently and cost effectively,” Parekh said.

Says Narotam Sekhsaria, managing director of GACL, “it is a very positive development for both the companies. GACL wants to focus more on its core business like cement and it is a matter of pride that Hometrust and Gruh would be part of the HDFC family and these companies would grow more rapidly.” The deal will bring in Rs 60 crore cash flow to GACL and capital gains of Rs 33.30 crore.