Page 17 - Banking Finance May 2019 N

HOUSING

Indiabulls Housing Amends Merger Plan With Lakshmi PNB Housing Finance

Vilas Bank hits new low after CARE
Indiabulls Housing Finance Ltd. said it will make some amendments to its pro- places rating on watch
posed merger plan with The Lakshmi Vilas Bank Ltd.
"The scheme, among others, envisages amalgam-
ation of Indiabulls Housing and Indiabulls Commer-
cial Credit into and with Lakshmi Vilas Bank, on
ongoing basis and dissolution of IBH and ICCL with-
out being wound up," the housing finance company
said in a notification to stock exchanges.

When the deal was first announced on April 5, the two parties in a presentation
had said that Lakshmi Vilas Bank will amalgamate into Indiabulls Housing Fi-
nance, subject to Reserve Bank of India and other regulatory and statutory
approvals. While it is not clear what benefit would accrue from this change, it Shares of PNB Housing Finance
may prevent a transfer of the bank licence from Lakshmi Vilas Bank to Indiabulls (PNBHFL) recently hit a new low of
Housing Finance. Rs 683, down 4 per cent, after CARE
Ratings placed the company's ratings
The RBI typically does not easily permit a transfer of licence. The promoters of
on "watch".
Indiabulls Housing Finance, however, would still need clearance from the RBI
to hold more than 10 percent in the bank. "Basis the existing issued capital of "This is important in view of the in-
both IBH and LBV and the share exchange ratio, the shareholders of the IBH creasing share of corporate loan
will hold approximately 90.5 percent of the post-merger enhanced equity capi- book in PNBHFL's total loan portfo-
tal of the of the merged entity," said the exchange filing. lio and the consequent vulnerability
arising out of weakness in real estate
Since IBHFL holds 100 percent of the shares in ICCL, once the scheme of amal-
gamation becomes effective all shares of ICCL "shall stand cancelled," the com- sector. Also, the impact of the stake
pany said in its exchange filing. Further, once the amalgamation between the sale announced by Punjab National
two companies will take place and LVB issues equity shares to the shareholders Bank (PNB; promoter of PNBHFL) in
PNBHFL is to be seen," CARE Rating
of IBHFL, all equity shares of the later would stand "extinguished."
said in a statement.
Aadhar Housing Finance reports 41% jump in its net The ratings agency, however, said it
would continue to monitor the devel-
profit in FY19
opments and would take up the re-
Aadhar Housing Finance reported an increase of 41 per cent in net profit at Rs view of the rating as and when there
162 crore for the 2018-19 fiscal. The company's net is further clarity on the situation.
profit stood at Rs 115 crore in 2017-18. Total income
"Overall, Housing Finance Companies
increased to Rs 1,263.76 crore from Rs 815 crore in the
year-ago period, it said in a release. Loan disbursements (HFCs) with focus on retail housing fi-
during 2018-19 stood at Rs 3,191.85 crore. The gross nance are expected to maintain ad-
equate profitability on the back of
retail NPA (on retail AUM) was at 0.58 per cent as on
March 31, 2019, Aadhar Housing said. Total assets under management (AUM) healthy business growth and low
grew to Rs 10,016 crore by the end of 2018-19 from Rs 7,966 crore in 2017-18. credit costs. Weakness, however, in
credit profile of builder / corporate
"Most of the NBFC/HFCs have been passing through a tough, challenging time
loans of HFCs, rising competition and
from September 18 onwards. The banks have supported liquidity through the the resultant possible dilution in
purchase of a loan pool, and Aadhar continues to maintain sufficient liquidity.
credit underwriting norms, and long-
"The process of change of the company's ownership and control to global pri-
term funding are the key challenges
vate equity major Blackstone is at an advanced stage," said Deo Shankar Tripathi,
MD and CEO, Aadhar Housing Finance Ltd. for the sector," the agency said.

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