The Hindu Business Line : Dewan Housing to launch road show for QIPs soon

Dewan Housing Finance Ltd (DHFL) will begin road shows for qualified institutional placements (QIPs) of equity shares in South East Asia, West Asia and Europe in the next 10 days.

Mr Kapil Wadhwan, Managing Director of the company, told this to Business Line on Friday. This follows a recent revision in the FII investment limit up to 40 per cent from 24 per cent in the enhanced paid up capital.

Equity warrants

In a parallel fund raising plan, DHFL is also issuing convertible equity warrants to the promoters. Mr Wadhwan said that the company was seeking to raise a total of Rs 245 crore through these exercises.

The share placement will be worth around $50 million and DHFL intends to rope in a maximum of three overseas investors. The placements and issue of 19-lakh warrants to promoters will be wrapped up next month with an issue date of January 7.

Currently FIIs hold 16.23 per cent and the promoters’ holding is at 53.94 per cent of the paid up capital of Rs 60.52 crore. So far, Caledonia Investment plc was the only substantial overseas investor with 13.53 per cent stake in the company.

The BSE Small Cap stock today finished flat at Rs 240, after touching its year-high at Rs 252. The traded quantity in the counter was more than double its average fortnightly volume on the BSE. In the past one month it has improved by over 33 per cent.

Pricing power

According to Motilal Oswal, DHFL’s core competence in lending to low- and middle- income customers gave it a better pricing power and higher margin (3 per cent plus).

The brokerage firm placed its 2007 return on equity at 16.4 per cent, but reckoned that it would drop to 13.5 per cent in 2008. Motilal Oswal valued unrealised gains on its investments in HDIL (group’s realty outfit), yet-to-be listed Wadwan Food Retail and DHFL Vysya Housing Finance Co (an unlisted subsidiary) at Rs 67 per share of Dewan Housing’s fully diluted equity. It further estimated that DHFL’s asset management venture (expected assets under management of $275 million by FY09) would add Rs 26 per share “on a conservative basis”.

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