Cash-strapped Dewan Housing Finance Corporation Ltd’s shares jumped 14.16 per cent on Tuesday to close at ₹60.05 apiece on the back of reports that AION Capital is likely to infuse about ₹8,000 crore in the housing finance company to pick up about 51 per cent stake.

Fresh shares are expected to be issued to AION Capital, which is a joint venture between private equity firm ICICI Venture and the US-based alternative asset manager Apollo Global Management.

Lenders may hold 26 per cent stake in DHFL due to conversion of debt into equity. The banking sector’s exposure to DHFL is about ₹46,000 crore, including about ₹32,000 crore direct (loan) exposure and about ₹14,000 crore by way of investments in debt instruments issued by the company.

The promoter group’s stake in the company could come down to 10 per cent from 39 per cent.

California retirement fund’s stake-buy

This development also comes in the backdrop of the California Public Employees’ Retirement System (CalPERS) buying more than 1 per cent stake in DHFL through bulk deal in NSE late last week.

CalPERS bought 41,51,515 equity shares of DHFL at a price of ₹53.6 apiece on July 19.

DHFL, in its notes to accounts to the fourth quarter financial results (for FY2019), said that it is undergoing substantial financial stress since second half of the current financial year.

According to notes to accounts, the company has suffered consistent downgrades in its credit ratings since February 2019. On June 5, the credit rating was reduced to ‘default grade’ despite there being no default till that date.

The company said its ability to raise funds has been substantially impaired and the business has been brought to a standstill with there being minimal/virtually no disbursements. These developments may raise a significant doubt on the ability of the company to continue as a going concern, it added.

Related Topics