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Journalism of Courage
MUMBAI, MAR 15: GE Capital Services (GE Caps) has wrested the management control of Countrywide Consumer Finance Services Limited (CCFSL), a joint venture company in which Housing Development Finance Corporation (HDFC) was holding 45 per cent stake. In an agreement signed on March 4, HDFC sold off 20 per cent, while still retaining the balance 25 per cent of the stake.
At an agreement price of Rs 30 per share (premium of Rs 20 per share), this much-awaited deal aggregated to Rs 20 crore. The foreign investment promotion board (FIPB) cleared the GE Caps proposal to raise its holding in CCFSL few months back.
With this acquisition, GE Caps has acquired full management control and a 75 per cent stake in the consumer finance subsidiary. However, HDFC will still have one nominee director representing its 25 per cent stake, while Deepak Parekh is to step down from the post of the chairman of CCFSL. George Jacob will be the sole representative of HDFC on CCFSL board. A clause within the agreement requires HDFCto sell its balance stake by the next year, and GE Caps is required to make arrangements for this transfer, to seal the parting of ways after a five-year relationship.
Market sources expect GE Caps to merge with CCFSL with GE-TFS (Transport Finance Services Ltd), its equipment and vehicle finance subsidiary.
Meanwhile, HDFC is chalking out its plans to enter the consumer finance business within the next few months, with a view to build up on the vast client base of CCFSL. Sources close to HDFC say that the initial thrust will be on car finance and consumer loans- especially to the existing home loan borrowers of HDFC. The housing finance major is targeting about Rs 200 crore worth of business in fiscal 1999-2000 through its consumer financing wing.
