Global alternative investment management firm Oaktree Capital Management LP has invested Rs 1,375 crore ($194 million) to buy loans from Dewan Housing Finance Corporation Ltd.
The Mumbai-based deposit-taking mortgage lender said in a stock-exchange filing on Tuesday that it raised the sum by securitization of loans in its project finance portfolio.
The transaction comes as a big breather to Dewan Housing, which came under scrutiny last year over concerns related to a liquidity crunch that plagued the broader non-banking financial sector after debt defaults by Infrastructure Leasing & Financial Services (IL&FS).
"We recently committed to expeditiously bring down our project finance exposure. Within less than two months of making the above commitment, the company has consummated the above transaction that reduces its project finance book by about 8%," said Kapil Wadhawan, chairman and managing director at Dewan Housing. "We will continue to focus on growing our retail lending franchise."
Pedro Urquidi, a co-portfolio manager in Oaktree's distressed debt group and head of its investment teams in Europe and Asia, said the transaction is the first of its kind in India. He added that the deal represents how Oaktree applies its multi-asset class, structuring, underwriting, investing and restructuring expertise to team up with Asian financial institutions.
Dewan Housing said the transaction involves securitisation of wholesale real estate project finance loans with security over a near-complete residential project in Mumbai. It said the transaction represents one of the largest investments in Indian residential real estate by an institutional investor.
The lender also said it is looking to reduce its real estate project finance exposure through more such transactions in the future. Last week, the company had said it took steps to reduce its developer loan portfolio to Rs 10,000 crore by March 2019 and halve the builder book.
Certus Capital acted as the financial adviser for this transaction.
Alternative investment firm Oaktree invests across four asset classes - credit, private equity, real assets and listed equities. It managed assets worth $124 billion as of 30 September 2018. The firm has more than 900 employees and offices in 18 cities across the world.
Jay Wintrob, chief executive officer at Oaktree Capital, had said in 2017 that the firm saw opportunities to invest "more aggressively" in Indian and Chinese distressed debt as the legal and regulatory systems of the countries developed.
Established in 1984, Dewan Housing's loan products include house loans, loan against property, project loans, and small and medium enterprise loans.
As on 30 December 2018, Dewan Housing had Rs 1,26,720 crore of assets under management, according to its investor presentation. Its loan book stood at Rs 96,839 crore.
Last month, Dewan Housing had agreed to sell its entire stake in the mutual fund business DHFL Pramerica to its US joint venture partner Pramerica Financial as part of efforts to focus more on its core business.
Wadhawan Global Capital, which owns 37.3% of Dewan Housing, is also looking to sell a stake in unit Aadhar Housing Finance Ltd, which is backed by International Finance Corporation.