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Welspun in talks to own slum rehabilitation projects, loaned by Dewan Housing Finance Ltd
The Economic Times  |  May 29, 2019

Saikat Das Mumbai

If the deal goes through, the existing agreement between DHFL — any other lender for that matter — and the builders would be revised to include Welspun as a party, a source said.


Textile group Welspun may take partial ownership in the slum rehabilitation projects that Dewan Housing Finance Ltd (DHFL) has financed, offering a boost to the lender’s efforts to raise cash.


The Welspun group is in talks with the local builders that are currently developing the projects to take joint ownership, two people with the direct knowledge of the matter said. Welspun has already informed the cash-strapped home financier about its intention, said one of the people. It could either be Welspun taking the projects on its books or a family office of promoter BK Goenka picking up the stake.


DHFL had lent about Rs 5,000 crore to a group of real estate firms that is developing a few slum rehabilitation projects, the person told ET. If Welspun takes partnership in these projects, it will play the role of a master developer that provides corporate guarantee against loans taken for those projects, the person said. Such a scenario will boost the creditworthiness of the projects and increase the proceeds for DHFL which is trying sell those loans. Improvement in the loan account would also ease a major drag on DHFL’s move to sell a stake to raise cash that it badly needs to meet upcoming loan repayments and securitisation payouts.


DHFL and Welspun didn’t respond to emails seeking comment until press time Tuesday.


If the deal goes through, the existing agreement between DHFL — any other lender for that matter — and the builders would be revised to include Welspun as a party, giving more comfort to the lender, said the second person.


The housing finance company is battling a cash squeeze as it seeks to repay its credit obligations. It has about Rs 8,400 crore of loan repayments and securitisation payouts coming up in the next few weeks.


The lender is in talks with several entities as it proposes to dilute promoter’s stake to mop up funds. DHFL has been selling both retail and wholesale loans to banks and other investors to improve its liquidity.


While the company’s retail loans are performing and valued higher, loans to builders are apparently billed as an obstacle for its proposed stake sale. Lenders are shying away from real estate loans amid tight market liquidity.


The company has signed a nonbinding pact with US-based Oaktree Capital to sell wholesale real estate loans worth Rs 17,000-18,000 crore, ET reported on May 16.


DHFL’s management continues to focus on the induction of a strategic investor and securitisation of non-housing loan exposures. These initiatives remain critical for restoring market confidence, which will help bolster resource-raising ability, rating company Crisil said on May 11. Crisil has downgraded DHFL’s commercial paper to A4+ from A3+, citing liquidity concerns. It remains on “rating watch” with negative implications, which suggests another potential downgrade.