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DHFL Needs Equity Infusion of Rs 3,000 Crore For Survival

Mortgage lender Dewan Housing Finance Corp. Ltd (DHFL) needs between Rs 2,500 crore and Rs 3,000 crore of fresh equity investments to sustain lending operations, two people aware of the development said.
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DHFL, which declared a quarterly loss of Rs 2,224 crore on Saturday, said in its notes to accounts that the National Housing Bank has restated the company’s FY18 capital adequacy ratio, which measures a bank’s capital in relation to its risk-weighted assets, at 10.24 percent, lower than its own assessment of 15.29 percent and the regulatory minimum of 12 percent. The company, however, said it does not concur with the housing finance regulator’s observation and will provide an appropriate response.
Yet, DHFL’s survival hinges on additional capital inflows. Unless it finds fresh money, many lenders, especially banks, will be reluctant to give fresh loans. These loans will enable DHFL to on-lend to some committed but unfinished projects, which will then fetch interest income. “According to assessments by potential investors, DHFL will need anywhere between Rs 2,500 crore and Rs 3,000 crore in fresh equity immediately to meet capital adequacy requirements,” said the first of the two people cited earlier, both of whom spoke on condition of anonymity.

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