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DHFL gets RBI’s nod for sale of Avanse Financial to Warburg Pincus Group

Mumbai

The Reserve Bank of India has approved the sale of DHFL’s stake in Avanse Financial to Warburg Pincus Group, DHFL said in a communication to the stock exchanges. DHFL board had on 16th March approved the divestment of the company’s entire 30% shareholding in Avanse Financial Services Limited to Olive Vine Investment, an affiliate of the Warburg Pincus Group.

Avanse Financial Services is an education-focused NBFC. It is an associate enterprise of of housing finance firm DHFL. Avanse is also backed by the International Finance Corporation (IFC), which has an equity stake in the company.

“The Reserve Bank of India (RBI) vide its letters received by Avanse on 4th June, 2019 has granted its prior approval for change in control/ownership and management of Avanse, subject to conditions,” DHFL said in a communication to BSE.

DHFL expects the divestment of the company’s stake in Avanse to be completed shortly.

In March, Wadhawan Global Capital (WGC), the parent company of DHFL, announced that it had entered into a definitive agreement with an affiliate of the Warburg Pincus Group to sell its entire 49.04% stake in its education finance subsidiary, Avanse Financial Services limited.

Rating agency Crisil on Wednesday downgraded commercial papers (CP) of troubled Dewan Housing Finance Corporation Ltd (DHFL), citing delays in debt servicing.

The downgrade comes after reports of default by the company in paying interest to the tune of ₹900-1,000 crore of NCDs, which were due on June 4.

“The downgrade reflects delays in debt servicing by DHFL on some of its non-convertible debentures (NCDs) not rated by CRISIL because of inadequate liquidity. The payments were due on 4 June,” Crisil said.

DHFL, in a statement to exchanges on Wednesday, said: “The action by the rating agencies is extremely surprising as the company has been making and continues to make substantial efforts in ensuring no defaults on any bonds, repayment of its financial obligations. These actions are unwarranted and the company is seeking clarification on the rationale that predicts DHFL’s inability to service pay‐outs on the due dates. Such speculative rating rationale is not adequate.”

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