DHFL promoters ready to sell controlling stake to global PE funds

Firm plans to raise Rs 7,000-8,000 cr of fresh equity capital

The promoters of Dewan Housing Finance Corporation (DHFL) are willing to give up their controlling stake to global private equity (PE) funds, according to people in the know. They said the firm is looking to raise Rs 7,000-8,000 crore of fresh equity capital, at a substantial premium to the market price.

The Wadhawan group controls 39.21 per cent and was earlier looking to reduce its stake by half and retain joint control of the firm with PE investors. The market capitalisation of the company, at the close of trade on Wednesday, was Rs 2,366 crore. The promoters are in talks with three PE funds, which include AION Capital (a JV between ICICI Venture and Apollo Global Management), True North, and KKR. However, a deal is expected to fructify only in a couple of months.

DHFL is also in talks with banks and other funds to sell close to Rs 6,000 crore of its wholesale loan portfolio, on which it will get a fee and margin from the buyer. This provides the firm a cushion for paying off about Rs 6,500 crore — due as principal amount of the non-convertible debentures — in July, August, and September. The outgo, said the people cited above, stands at slightly over Rs 2,000 crore a month.

People close to the negotiations said: “The promoters say they will do whatever they can to ensure fresh infusion of equity capital, and if that means giving away controlling stake, so be it. Only PE funds have the cash and can raise ECBs (external commercial borrowings), without depending on banks to get more funds.”

DHFL has sold as much as Rs 41,000 crore of its Rs 78,000-crore retail loan portfolio to banks and others, bringing the same down to Rs 37,000 crore. The proceeds have been utilised in making repayments. Similarly, its total wholesale loan portfolio of Rs 30,000 crore will also reduce by over Rs 9,000-10,000 crore after the proposed sale. It had already sold its wholesale loan portfolio of around Rs 4,000 crore earlier.

DHFL and its promoters have been selling assets to raise cash for a while. The promoters, as well as the firm (which held the entire stake in Avanse Financial), received a nod to sell the stake to Warburg Pincus for Rs 1,200 crore. It has also sold its stake in Aadhar Housing Finance Corporation to Blackstone for Rs 800 crore. The firm on Tuesday paid 40 per cent of its Rs 375 crore to pay on its commercial papers. However, people in the know said it is expected to complete the entire repayment over the next few days.


PE inflows into realty up 26% to Rs 28,000 crore in first half of 2019

Pune saw 10-fold increase in PE inflow to $237 million in January-June period of this year

Private equity investment in real estate rose 26 per cent in the first half of this year to $3.9 billion (nearly Rs 28,000 crore) driven by higher inflow in commercial and warehousing projects, according to property consultant Colliers.

PE inflows from foreign investors increased 28 per cent during the first six months of the 2019 calendar year.

“During the first six months of 2019, the real estate sector witnessed private-equity (PE) inflows of $3.9 billion (Rs 27,767 crore), eclipsing the first halves of previous years,” Colliers International said in a report.

The increase in PE inflow signals rising confidence of institutional investors in India’s premium office spaces, retail properties and warehousing sector, it said.

“Foreign funds remain active in the real estate market, with inflows from such investors rising 28 per cent in H1 2019. While foreign funds continue to be active in the commercial office space, they are also investing into the logistics sector,” the report said.

“The sector is at an inflection given the 3Rs – Reforms, REITs, and Results of the recently concluded elections. The year 2019 will see the bulls at play, with phenomenal capital influx in the office and logistics space,” said Suresh Castellino, Executive National Director, Capital Markets & Investment Services at Colliers International India.

Mumbai attracted maximum (27 per cent) of the total PE inflows, garnering around $1.05 billion of investments.

Pune saw 10-fold increase in PE inflow to $237 million in January-June period of this year.

During the first six months of the year, investments in commercial office assets accounted for 42 per cent share of total investments. Investors pumped in $1.2 billion into the retail sector, accounting for 31 per cent share.

“We foresee the current year to create a new record for investments in real estate, with investors viewing retail and logistics assets favourably in addition to commercial office assets,” said Megha Maan, Senior Associate Director, Research at Colliers International India.


Anil Ambani’s Reliance Infra bags Rs 7,000 crore Versov-Bandra Sea Link project

Reliance Infrastructure has won a Rs 7,000-crore contract to develop the Versova-Bandra Sea Link project from the Maharashtra State Road Development Corporation (MSRDC), the infrastructure development company said in a press release.

The project will be developed in partnership with Italy-based construction company, Astaldi.

Versova-Bandra Sea Link is a marquee project stretching across 17.17 km, which is three times the length of the Bandra-Worli Sea Link, which stretches 5.6 km. Reliance Infrastructure has 60 months to deliver the project, as per the contract.

Also read: Versova-Bandra Sea Link to reduce travel time from 90 minutes to 10 minutes! Reliance Infra bags project

Reliance Infrastructure has already completed the work related to soil investigation, in partnership with Fugro, and engineering design in partnership with Lebanese company Dar Al Handasah, the release said.


Coca-Cola in talks to pick stake in Cafe Coffee Day after pocketing Costa

Coca-Cola Atlanta office is leading the talks to acquire a substantial stake in the coffee chain

The world’s largest beverage company, Coca-Cola, has begun preliminary talks for a substantial stake buy in Cafe Coffee Day 10 months after it acquired UK-based Costa Coffee for $5.1 billion. The discussion with the Bengaluru-based company, promoted by VG Siddhartha, who exited information technology firm Mindtree earlier this year, is being led by the Atlanta office of the beverage major, persons in the know said.

T Krishnakumar, president and chief executive officer, Coca-Cola India and South West Asia, is currently in Atlanta and is involved in the negotiation, it is learnt. A Coca-Cola India spokesperson said the news about a possible acquisition was speculative in nature and that the company had no comment to offer at this stage. Cafe Coffee Day too declined to comment.

Coca-Cola has been looking to make inroads into the Rs 2,500-crore domestic coffee retail market in line with its global strategy of diversifying into non-carbonated drinks. While the Costa Coffee acquisition last year was intended to help the company do just that, an impediment has been the franchise agreement that Costa’s previous owner Whitbread had with billionaire-bottler Ravi Jaipuria in India.

Jaipuria’s Devyani International continues to run around 50 stores of Costa Coffee in the country, unable to work out a deal with Coca-Cola for his exit out of the franchise agreement. Jaipuria was not immediately available for comments on the matter.

For Cafe Coffee Day, an acquisition by Coca-Cola will mean much-needed funds to reduce the debt on the books of parent Coffee Day Enterprises. Cafe Coffee Day is owned by Coffee Day Global, a subsidiary of Coffee Day Enterprises.

As on March 31, 2019, Coffee Day Enterprises’ total debt stood at Rs 6,547 crore, two-and-a-half times its networth of Rs 2,529 crore. Its market capitalisation after Wednesday’s closing price stood at Rs 4,732 crore.


Adani Ports plans to raise $750 million

“The finance committee of Adani Ports and Special Economic Zone Ltd has approved the issuance of fixed rate senior unsecured notes aggregating to USD 750 million and has approved the pricing, tenure and other terms of the notes,” APSEZ said in a regulatory filing.

Adani Ports and Special Economic Zone Limited (APSEZ) on Thursday announced plans to raise USD 750 million (approx Rs 5,195 crore) to fund its capital expenditure requirement and also to retire some of its debt.

“The finance committee of Adani Ports and Special Economic Zone Ltd has approved the issuance of fixed rate senior unsecured notes aggregating to USD 750 million and has approved the pricing, tenure and other terms of the notes,” APSEZ said in a regulatory filing.

The company said it intends to use the proceeds primarily for capital expenditure, including on-lending to subsidiaries for purposes, and the remainder for repaying existing indebtedness as permitted under the applicable laws including the external commercial borrowing guidelines and/or if required, approvals of the Reserve Bank of India.

The notes are expected be listed on the Singapore Exchange Securities Trading Ltd, the company added.

Shares of APSEZ were trading 0.92 per cent lower at Rs 411.20 apiece on BSE