 "DHFL to sell entire stake in asset management joint venture to Pramerica")
In the wake of a liquidity crunch in NBFC and HFC space, Dewan Housing Finance Corporation (DHFL) Tuesday said it will sell its entire stake in mutual fund business, DHFL Pramerica Asset Managers, to its joint venture partner Prudential Finance.
DHFL currently holds 50 per cent stake in DHFL Pramerica Asset Managers (DPAM), with 17.12 per cent directly and 32.88 per cent through subsidiary DHFL Advisory and Investments.
"Pramerica Financial and DHFL have entered into a binding term sheet to acquire DHFL's stake in their 50:50 joint venture asset management company, DHFL Pramerica Asset Managers," an official statement said.
The proposed transaction is subject to definitive documentation, applicable regulatory and other approvals and certain other conditions, it added.
After the exit of DHFL, the mutual fund business will become a wholly-owned subsidiary of PGIM, the global asset management business of Prudential Finance, it said.
Kapil Wadhawan, chairman and managing director, DHFL, said this is a strategic call by DHFL to focus more on its core business.
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"We firmly believe that this move is in the best interest of all parties and will have a positive outcome for all stakeholders," he added.
Glen Baptist, chief executive officer, PGIM Global Partners, said the company sees tremendous opportunity in the asset management market in India.
"The company strongly believes that when combined with the deep expertise and broad capabilities of PGIM, it is well positioned to serve its clients and to strengthen our competitive position in India," he added.
Baptist said the transaction will not change DPAM's scope of business.
Pramerica and DHFL formed the joint venture in 2014 and immediately expanded its business through the acquisition of Deutsche Asset Management (India).
The non-banking financial companies (NBFCs) and housing finance companies (HFCs) are facing a severe liquidity crunch after several defaults by the Infrastructure Leasing and Financial Services (IL&FS) in the past few months dampened the sentiments towards the sector.