Lenders to crisis-hit DHFL agree to sign inter-creditor agreement by July 5

Private capital firms like AION Capital, joint venture between ICICI Venture and Apollo Capital Management, and Lone Star are amongst players looking for a stake in DHFL

Lenders to Dewan Housing Finance Ltd (DHFL) will sign an inter-creditor agreement (ICA) by July 5 to begin a restructuring plan. The case will be dealt with under the Reserve Bank of India's (RBI’s) revised circular for restructuring stressed assets.

Lenders have set June 29 as the reference date for DHFL. This is the starting point for the 30-day review period in accordance with regulatory norms. After signing the ICA, lenders will consider a resolution plan given by the company, bankers said.

Bankers said on Monday their representatives had their first round of discussion. The status of accounts and tentative steps like part conversion of the debt and buying some loans of the Wadhawan family-controlled entity were discussed. 

The plan also includes roping in new investors and promoters ceding management control. Key lenders to DHFL include Union Bank, State Bank of India, Bank of India, and Bank of Maharashtra. DHFL has debts of more than Rs 90,000 crore.

Private capital firms like AION Capital, a joint venture between ICICI Venture and Apollo Capital Management, and Lone Star are among players looking at buying a stake in DHFL. 

And Oak Tree Capital is among those in talks to buy the wholesale portfolio.

Bankers say a timely resolution in DHFL is important since its liabilities are huge. Generating additional liquidity depends DHFL’s efforts to sell investments and induct a strategic investor, and asset pool sell-downs. DHFL has postponed its board meeting for approving the audited financial results of the fourth quarter and annual FY19 to July 13.

Facing pressure in meeting repayment obligations, promoters have been divesting group businesses. It has sold Aadhar Housing Finance to private equity firm Blackstone. They have also sold the education finance subsidiary, Avanse Financial Services Ltd, to an affiliate of the Warburg Pincus Group. It is also in the process of selling a stake in the life insurance company and mutual funds.

Within 10 months of starting its wealth management business, WGC Wealth, the Wadhawans, promoters of DHFL, have exited the venture by selling their stake to employees. It was renamed as Validus Wealth after the transaction.

In a separate transaction, LGT Group, global private banking and asset management firm, has acquired a substantial majority stake in the Validus Wealth, the company said in a statement. It, however, did not disclose the financial and ownership details for both the deals.

Making some of DHFL assets performing is being considered. Some of the projects to which DHFL had lent are facing problems, delay in execution, etc.

Many developers have overextended, have taken up various projects and not been able sale it.  That log jam has to be broken and so you look at most of viable projects to see that they need some working capital finance and how that can be arranged. Probably get some external investor to provide needed.