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DHFL shares rise as lender tries to assuage liquidity concerns; company denies diverting loans to shell companies

Dewan Housing Finance Corp Ltd (DHFL) shares rose on Monday following five consecutive sessions of decline, after the Indian home loan provider said it was keen to sell assets and some of its businesses to improve liquidity.

The stock rose as management tried to assuage liquidity concerns on a conference call with investors, media and analysts. The stock was trading 5.9 percent higher at 117.70 rupees at 0745 GMT on Monday.

DHFL lost nearly half of its market value over five sessions ending Friday, its worst week since listing, hit by claims of financial mismanagement - which it has denied - and broader sectoral woes.

 DHFL shares rise as lender tries to assuage liquidity concerns; company denies diverting loans to shell companies

Representational image. Reuters

The decision to explore the sale of its non-core businesses comes amid a slew of allegations by investigative media outlet Cobrapost, which last week said DHFL diverted loans from state banks to shell companies, including those linked to its controlling shareholders.

DHFL denied diverting loans to shell companies and said it had not received any communication from the government in relation to any investigation.

The allegations are the latest setback in the shadow banking sector after a liquidity squeeze and a string of defaults at market leader IL&FS, triggering sharp falls in stock and debt markets last autumn.

On Saturday, DHFL said it would sell 9.15 percent of Aadhar Housing Finance Ltd to private equity funds managed by Blackstone Group LP.

It also said its controlling shareholders - Wadhawan Global Capital, headed by DHFL Chairman Kapil Wadhawan - would not sell their stake in DHFL at the current valuation.

The executives also said DHFL has not delayed any payments to creditors, a day after CARE Ratings placed some of DHFL’s bonds, deposits and loans on “credit watch with developing implications”.

DHFL said it will approach the credit-ratings firm for a review, but did not elaborate.

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Updated Date: Feb 04, 2019 15:15:51 IST