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HDFC – Consolidation to benefit - Views on News from Equitymaster
 
 
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  • Jun 28, 2000

    HDFC – Consolidation to benefit

    India’s largest housing finance company HDFC has acquired the housing finance business of Gujarat Ambuja Cements Ltd. (GACL) and its 26% stake in Gruh Finance Ltd. for a total consideration of Rs 600 m. HDFC’s this move will enable it to consolidate its position and increase its market share effectively resulting in better utisliation of delivery channels.

    GACL’s subsidiary Hometrust Housing Finance Company Ltd. would be merged with HDFC while Gruh Finance would remain a subsidiary for the time being. After the acquisition HDFC’s stake in Gruh Finance will go up to 54%. As expected by its Chairman, this deal will help the company to broad base its presence in the country and bring an additional 14,000 customers into its fold. Hometrust Housing currently has 21 offices all over India and a loan portfolio of Rs 1.7 bn. Gruh Finance has around 24 offices in Maharashtra and Gujarat.

    In order to increase its market share further HDFC has also signed agreements with several housing finance companies. It has decided to acquire receivable (advances) pertaining to the loan portfolio of Global Housing Finance Corporation Ltd. for Rs 425.5 m in a phased manner and a part of receivables of Weizmann Homes Ltd. Both these companies would continue to source housing loans under their own names. HDFC will from time to time consider acquiring receivables from them.

    Although all the four deals will marginally increase the current advance portfolio of more than Rs 100 bn, it will surely benefit the company in increasing its distribution strength. The company will now be able to deliver its products to a large customer base more efficiently and cost effectively. All in all it’s a win-win deal, the company will have the opportunity to cross-sell the entire range of financial products such as banking, housing finance, saving products and the proposed mutual fund and insurance products.

     

     

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