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Blackstone’s India Subprime Lender Dumps Small-Builder Portfolio

Divya Patil and Baiju Kalesh

(Bloomberg) -- Blackstone Group Inc.’s Indian subprime mortgage lender plans to exit its small builder financing business at a time when pain from the nation’s credit crunch abounds, with another victim claimed this week.

“We are in the process of phasing out this small builder loan portfolio to keep the company 100% retail focused as per mandate from new owners,” said Deo Shankar Tripathi, 66, chief executive officer of Aadhar Housing Finance Ltd., in an interview.

The Reserve Bank of India this week seized major non-bank lender Dewan Housing Finance Corp., which held a controlling share in Aadhar until selling it to Blackstone in June. India’s more than 15-month-old credit crisis has dragged economic growth down to its slowest in six years.

Read more about the RBI move here.

The RBI seized control of Dewan Housing on Wednesday, stepping up efforts to contain the economic fallout from the nation’s shadow banking crisis. Tripathi said he expects some improvement in Indian credit markets next quarter.

While more than 99% of Aadhar’s lending is already to individuals, about 45% of non-performing loans at the end of March were tied to its small non-consumer book, according to an India Ratings’ review last month. Blackstone’s capital injection lowered Aadhar leverage from 9.5 times of net-owned funds to 3.75 times, according to Tripathi.

(Adds details on RBI seizing control of Dewan in the fourth paragraph.)

To contact the reporters on this story: Divya Patil in Mumbai at dpatil7@bloomberg.net;Baiju Kalesh in Mumbai at bkalesh@bloomberg.net

To contact the editors responsible for this story: Andrew Monahan at amonahan@bloomberg.net, Finbarr Flynn

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