Mumbai: Housing finance firm Dewan Housing Finance Corp. Ltd (DHFL) on Tuesday said that it will sell its entire stake in mutual fund business DHFL Pramerica Asset Managers Pvt. Ltd to its joint venture partner US-based Prudential Financial Inc., the company said in an exchange filing. DHFL said it will also sell the 50% stake it holds in DHFL Pramerica Trustees Pvt. Ltd.

DHFL holds 50% stake in the mutual fund business—17.12% directly and 32.88% through subsidiary DHFL Advisory and Investments Pvt. Ltd, according to the exchange filing.

The financial services company has entered into sale agreements with PGLH of Delaware Inc. an entity owned by Prudential Financial.

“The company and the acquirer have entered into a binding term sheet on 18 December 2018. The proposed transaction is subject to definitive documentation, applicable regulatory and other approvals and certain other conditions," the statement said.

The announcement to exit the mutual fund business comes in the wake of the liquidity crunch in India’s NBFC and HFC space, which has impacted the stock price of many private sector lenders.

The woes of non-banking financial companies (NBFCs), which started in September with defaults by Infrastructure Leasing and Financial Services Ltd (IL&FS), have hurt sentiments towards NBFCs, as witnessed in the stock prices of several leading companies in the sector.

DHFL shares have fallen almost 68% since the start of September to 215.85 as of Tuesday.

DHFL Asset Managers reported revenue of 129.74 crore in financial year 2017-18, as against a revenue of 109.67 crore in the previous year. It reported a profit of 7.76 crore in 2017-18, compared to a profit of 7.64 crore a year ago.

DHFL had acquired the 50% stake in the mutual fund business in 2015.

DHFL also has a life insurance joint venture with Prudential Financial. In October 2016, Prudential had increased its stake in the life insurance joint venture—DHFL Pramerica Life Insurance Co.—to 49%, from 26%.

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