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Cash-strapped Dewan Housing Finance Corporation has received market regulator SEBI’s approval to sell its portfolio management business to joint venture partner Prudential Financial Inc of the US.
“We have received SEBI approval for the proposed change in shareholding in DHFL Pramerica Asset Managers for the portfolio management service,” said DHFL Pramerica PMS.
The proposed change in shareholding once completed will result in the portfolio manager becoming part of US-based Prudential Financial Inc (PFI), the second-largest insurer in the world with assets of over $1.4 trillion, and ranking 50th in the list of Fortune 500 companies, it said.
In the wake of recent developments affecting DHFL, PFI said that the portfolio management business does not have any debt or equity exposure to DHFL and hence, is not impacted by the developments.
“We expect the proposed change in shareholding to take place soon and investors to receive an intimation on the same,” it said.
DHFL is also in the process of selling its mutual fund business to joint venture partner Pramerica and had signed a deal last December. Pramerica and DHFL formed the joint venture for the mutual fund business in 2014.
In response to a BusinessLine query, a DHFL spokesperson said: “We have received approval for PMS, scheme mergers and are hopeful to get approval for sale of mutual fund by the month-end. Mutual fund has change in control of AMC and sponsor, while PMS is only change in control of status.”
Fall in asset size
In May, DHFL Pramerica Mutual Fund decided to merge two of its schemes after their exposure to its sponsor Dewan Housing Finance had risen sharply due to fall in asset size.
With assets of just ₹13 crore as of April-end, the Floating Rate Fund had an exposure of 31.9 per cent of its assets to DHFL. Before the IL&FS crisis in September, the fund’s size was ₹640 crore and exposure to DHFL was 6.58 per cent.
Similarly, the Medium-Term Fund with assets of ₹34 crore had 37.41 per cent exposure to Dewan Housing Finance’s debt paper and 47.28 per cent to Indiabulls Housing Finance. The fund had seen over 90 per cent fall in its assets to ₹34 crore from ₹437 crore at August-end. In August, the scheme’s exposure to Dewan Housing Finance and Indiabulls stood at 9 per cent and 5.7 per cent, respectively.
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