11 highlights
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Last year, despite the pandemic, the Mumbai-based non-banking financial company, or NBFC, managed to raise more than Rs 100 crore in capital, 60% of it coming from foreign investors. It got big names like global investment bank Nomura to buy its stock from the open market, at a valuation more than five times the book value. It also managed to get lines of credit from banks that will ensure that it has enough funds to grant loans for the next 15 months at least.
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Shares of the company shot up 700% in the last 12 months, taking its market capitalization to Rs 1,250 crore. This makes it one of the best performers among NBFC stocks in the market. The NSE’s finance index, in comparison, was up 32% in the same period.
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For all the hype, the company isn’t into anything spectacular. It’s just normal fare—gold loans, credit to small and medium businesses, education and medical loans. The average ticket size—at just about Rs 1 lakh—is also small. The source of its funds are the banks which give other NBFCs loans. And, it’s credit rating is BBB, just about investment grade and several notches lower than the likes of gold loan company Manappuram Finance Ltd, which has seen its valuation slip since the pandemic began.
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In the year that followed, the company shored up its board, bringing in K.P. Raghuvanshi and Manjari Ashok Kacker as non-executive independent directors. Both are directors in Anil Ambani-owned Reliance Infrastructure.
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Son of film producer Ramanjit Juneja, known for making the Amitabh Bachhan-starrer Mr Natwarlal, among other films, Juneja was believed to be an insider in DHFL and close to its promoter, Kapil Wadhawan. Once he joined Dhanvarsha, several others from DHFL followed, including the current compliance officer.
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Now, investment banks like Nomura engage in deals that are at least a billion dollars in value. In DHFL’s case, they agreed to help sell Aadhar Housing Finance in a deal worth $330 million. Nomura did lay down some stringent clauses—the sale proceeds would come to an escrow account and they would take their fees before DHFL got its hands on the money.
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After the completion of the open offer, Mehta was elected to the board of Dhanvarsha in August 2018, and he took on the role of non-executive chairman. Joining him on the board was his father-in-law Ashish Dalal, the founder and partner of Dalal & Shah, a well known audit firm, which was later merged with PwC.
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In Truevalue Agro, which dealt with agricultural commodities like rice, pulses, white sugar, palm oil and animal feed, it looked like Mehta had built up a fairly good business. With a paid-up capital of Rs 7 crore, the company generated revenues of Rs 225 crore and post tax profit of Rs 2.72 crore in March 2018. But, what he had managed to do with Dhanvarsha was nothing short of spectacular. For an investment of less than Rs 25 crore (across the preferential issue and the subsequent open offer), Mehta had built up a majority stake in the company that is today worth many times that.
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Enter Nimir Mehta.
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He is also a member of the managing committee of the Shri Vile Parle Kelavani Mandal, which runs several educational institutions in Mumbai.
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A finance executive in a large investment banking firm, who asked not to be named, feels Nimir Mehta’s move to bring in Rohan Juneja in August 2019 could well have been a turning point for the company. Though Juneja had no operational experience in running a finance business, he had previously worked closely with private equity firms on Wall Street before joining as head of research at Wadhawan Global Capital, the holding company of bankrupt mortgage lender Dewan Housing Finance Corp. Ltd.