Dewan Housing Finance Corporation Ltd, a private sector housing finance player, is acquiring the India mortgage lending unit of Deutsche Postbank AG in a Rs 1,079-crore (€173 to 177 million) deal. The deal involves Dewan Housing taking a 67.5% stake in Deutsche Bank Home Finance with promoter family Wadhawan and foreign investor Caledonia Investments taking the remaining stake. The acquisition is one of the largest M&A deals in the Indian housing finance space.
The deal, which may prove to be a transformational acquisition for Dewan Housing, would take its balance sheet size to Rs 20,000 crore by March next year, from Rs 11,400 crore as on September. The balance sheet size of Deutsche Postbank Home Finance (DPHFL) is about Rs 5,500 crore. Caledonia Investments holds a 9.6% stake in Dewan Housing, whose backers also include PE firm Asiabridge.
The share price of Dewan Housing reacted sharply to the deal, shooting up by more than 15% to Rs 321 in the morning trade. The shares were trading at around Rs 300 levels at the time of filing this article, up by 8%. Dewan Housing had a market capitalisation of Rs 3,136.42 crore at this price.
As on September 30, DPHFL’s home loan portfolio stood at Rs 4,813 crore (€831 million) with a profit of Rs 38 crore for the six month period. DPHFL had a networth of Rs 524 crore with over 32,000 customers, serviced through its 25 branches, 14 sales offices and 3 processing units across India. It has a CAR of 19.6%.
Postbank’s sale of its Indian subsidiary is in line with the strategic focus that it defined in 2009 which states it will focus largely on the German market in the future in its core retail banking business, said the company in a statement. DPHFL became a member of the Postbank Group when BHW Holding AG was acquired in 2006.
The deal is expected to close in the first quarter of 2011 and is subject to approval by the National Housing Bank. Rothschild was the lead financial advisor along with India Advisory Partners to the Dewan Housing consortium, while Standard Chartered advised Deutsche Postbank.
Dewan Housing had a portfolio of Rs 11,145 crore with a networth of Rs 1,496 crore as of September 30, 2010. The firm reported a net profit of Rs 145 crore for the first two quarters of this fiscal and claims a CAGR of 45% for the loan portfolio during the last three fiscals. Dewan Housing acquired Vysya Housing Finance back in 2003.