Mumbai: The country’s largest mortgage lender, Housing Development Finance Corp. Ltd, or HDFC, is looking at a substantial value unlocking move in which its investments in several non-core businesses will be moved out of the company. Chairman Deepak Parekh gives details of the move in an interview. Edited excerpts:
You mentioned that you are looking to move some non-listed subsidiary stakes that HDFC owns into a separate company. Is this harking back to the holding company debate that is going on or is this something different?
We have large number of unlisted investments—unlisted investments which are not our subsidiaries, which are not our group companies... These are under third party management.
Such as? Can you give me an illustration?
We have 5% of Lafarge Cement, we have Chalet Hotels. IL&FS, (Infrastructure Leasing and Financial Services Ltd) we promoted it...we have not sold a single share. IL&FS has been around for 22-23 years, it is very valuable today... So it is monetization of our old investments.
Value unlocking: Deepak Parekh, chairman, HDFC. Abhijit Bhatlekar/Mint
What are those investments roughly worth?
I am not sure.
In the region of?
Hundreds of crores (of rupees).
So you are actually looking to (exit) some of these investments?
We are looking at the possibility of forming an SPV (special purpose vehicle) and putting half a dozen, 8-10 companies that are not listed, which are not our group companies, separately and sell a part of it to a private equity (firm) or someone.
What is the time frame for this?
It never came to us, it never occurred... To do something, we were approached by a couple of people from overseas... So we are now looking at how do we value those and we have not done any valuation.
Any assessment of what the impact will be on the HDFC balance sheet?
We have invested with limited returns. The returns have only been in dividends in all this.
So you will actually be able to book returns on this as you transfer it out into an SPV in that sense?
That means huge gains for HDFC?
This is really the big headline story that you discussed today?
No. It is monetization of the old investments. It is capitalizing our old investments, part capitalization because we are not selling 100%.
You said several hundred crore, so less than 500 or more than 500 (crore of rupees)?
I am not sure of the numbers yet, really.
What do you think it could be?
The gain or the value?.
The value of the investments that you might be looking to move out?
The value would be (Rs) 200-300 crore, but the market value...will be much more.