Shares of cash-strapped Dewan Housing Finance Corporation Ltd. (DHFL) surged nearly 6 per cent in early deals on Wednesday after the housing finance company said it is selling its entire stake in DHFL Pramerica Aset Managers (DPAM) to Prudential Financial.
The Mumbai-headquartered company, which is facing serious financial crunch in Non Banking Financial Company (NBFC) and housing finance company (HFC) space, exited the mutual fund business to focus more on its core business. Following the announcement, shares of the company gained as much as 5.75 per cent to touch an intra-day high of Rs 226.20 apiece on the BSE, after opening higher at Rs 215.85 against previous closing price of Rs 213.90.
In a similar trend, stocks of the firm were trading at Rs 224.40, up 4.84 per cent on the National Stock Exchange.
DPAM is a 50:50 joint venture (JV) between DHFL and US-based Prudential Financial. DHFL holds 50 percent stake in the JV, with 17.12 percent directly and 32.88 percent through subsidiary DHFL Advisory and Investments.
"The Board of Directors of DHFL at its meeting held on December 18, 2018, have approved proposal to disinvest the entire shareholding held in DHFL Pramerica Asset Managers, both directly 17.12% through the Company and 32.88% through the Company's wholly-owned subsidiary, DHFL Advisory & Investments and 50% held by the Company in DHFL Pramerica Trustees," DHFL said in a filing to the Bombay Stock Exchange.
The proposed transaction is subject to definitive documentation, applicable regulatory and other approvals and certain other conditions, it added.
After the exit of DHFL, the mutual fund business will become a wholly-owned subsidiary of PGIM, the global asset management business of Prudential Finance, it said in the filing.
Meanwhile, the BSE Sensex was trading at 36,459.39, up 112.31 points, or by 0.31 per cent, helped by falling crude oil prices and higher rupee.
Edited by Chitranjan Kumar