Banks are unlikely to be agreeable to continuation of the existing promoter of cash-strapped Dewan Housing Finance Corporation (DHFL) in his current capacity on the board, going by the resolution plan that is being put together.
“Normally, in a resolution plan of this nature, banks will not allow the promoter to continue in the current capacity. They may have him on the board, but they may remove the controlling interest with him.
“The controlling interest will be with the new investor. The existing promoter will only have a shareholding interest. The promoter shareholding could be less than 20 per cent,” said a source clued in to the developments on this front.
The promoter group is represented on the DHFL board by Kapil Wadhawan, Chairman and Managing Director, and Dheeraj Wadhawan, Non-Executive Director.
Once the strategic investor, reportedly AION Capital, puts in about ₹8,000 crore to pick up 51 per cent stake in DHFL’s retail business, the controlling stake will pass on to it and the existing promoters – Wadhawan Global Capital and Wadhawan Hindu Undivided Family, who currently together hold 39.21 per cent stake – will become ordinary shareholders, with less than 20 per cent stake, they added.
Sources said the strategic investor wants to invest only in DHFL’s retail business if the banks are willing to restructure its liability as well as keep its wholesale liability and wholesale book arising therefrom as separate from the retail book.
“Strategic investors want to invest in DHFL as a retail entity by picking up 51 per cent stake and run the business separately. Further, they want lenders to be agreeable to keep aside the wholesale loan and the underlying liability and restructure the latter.
“This way the new investor can get value from the retail entity for the money it is investing. The banks can realise the wholesale loan book in a phased manner,” said the source.