Sameer Gehlaut May Lose Promoter Status in Indiabulls Housing

Sameer Gehlaut, one of the original promoters of Indiabulls Housing Finance, may be looking to reduce his stake to below the statutory minimum required to be classified as a promoter.

Currently, Sameer Gehlaut holds about 21% stake in Indiabulls Housing Finance and if the stake goes below the 10% mark then he would lose his status as the promoter of Indiabulls Housing Finance.

What does that reduction mean in money terms? The current market cap of Indiabulls Housing Finance stands at around Rs.10,500 crore. Hence the 21% stake in Indiabulls Housing Finance would be worth around Rs.2,150 crore.

He would have to look at selling out at least stock worth Rs.1,100 crore to be able to be de-classified as a promoter. But, first a quick background.

One of the big bets that Gehlaut and Indiabulls Finance were making a few years back was to merge with Lakshmi Vilas Bank or LVB. However, the approvals from the RBI did not come through due to the huge exposure that the Indiabulls group had to the real estate business.

That had put Indiabulls Housing in a spot as it lost out on the opportunity to leverage on a banking balance sheet.

Check - How Indiabulls Housing Finance is Deleveraging its Balance Sheet

KG Krishnamurthy of HDFC Home Finance had been nominated as an independent director on the board Indiabulls Housing Finance and he has taken charge after the exit of Sameer Gehlaut from executive responsibilities.

Currently, Gehlaut runs Dhani, an app based funding and credit card originator with support from private equity funds and other equity partners.

The big issue is how does Gehlaut get an exit from Indiabulls Housing to reduce his stake. His stake needs to come down by over 11% to lose promoter status in the company. That would tantamount to selling stake worth around Rs.2,100 crore. The stock is already quoting at a premium to the book value.

Any private placement would be tough in the aftermath of the PNB Housing Finance / Carlyle deal being called off after it ran into problems with the regulator. The issue again would the logic of offering shares via private placement instead of offering to existing shareholders.

The other contentious issue would be the issue of independent valuation of the business. These remain some of the key questions.