Chambal Fertiliser to sell Birla Home Fin stake for Rs 110 crore

Chambal selling 5 crore shares at premium of Rs 12 per share.

Chambal Fertilisers & Chemicals Ltd, the flagship of the K K Birla-promoted Zuari-Chambal group, has decided to sell its 50 per cent stake in Birla Home Finance Ltd to its joint venture partner, BHW Holding AG of Germany, for Rs 110 crore.

BHW Holding had bought a 50 per cent stake in the housing finance company in 2000.

"The proposal for disinvestment of the company's holding in Birla Home Finance was approved by the banking and finance committee of the board of directors of the company at its meeting held on March 9, 2004. The proposal is, however, subject to the necessary statutory and corporate approvals by the parties," Chambal today said in a communication to the Bombay Stock Exchange.

This marks the Zuari-Chambal group's exit from the housing finance business. The group entered the business in May 1999 when Chambal acquired ITC Classic Home Finance Ltd.

Subsequently, the company's name was changed to Birla Home Finance Ltd and a new management was put in charge.

The group felt it could cash in on the housing finance boom by leveraging its extensive fertiliser distribution network. The next year, BHW Holding AG picked up a 50 per cent stake in the company.

Zuari-Chambal sources told Business Standard that the group had realised that housing finance did not fall within its core business of fertilisers, cement and seeds. They added that a top-level team from BHW Holding was in town for the final round of negotiations.

Founded in 1928, BHW Holding is one of the largest home finance companies in Germany.

As per the memorandum of understanding signed between the two partners, in addition to equity participation, BHW Holding was to provide assistance in sales management, including training, and specialised home financing products, and the development of appropriate treasury products in line with the best international practices in relation to refinancing and interest rate hedging instruments.