The Piramal group is all set to bag the troubled Dewan Housing Finance Corporation (DHFL), with lenders led by public sector banks backing its Rs 37,250-crore bid for the takeover of the mortgage firm.
The long-drawn battle over the first-ever financial services company under the Insolvency and Bankruptcy Code (IBC), Dewan Housing Finance Limited (DHFL), has neared a conclusion.
Piramal Enterprises has emerged as the preferred bidder for DHFL by garnering around 94 percent votes from the Committee of Creditors (CoC), according to sources aware of the outcome.
According to banking sources, banks weren’t in favour of clearing the bid by the US’ Oaktree Capital, which has been in a fierce battle with the Piramals for the housing finance agency.
The Piramal bid acquired 94 percent voting from the lenders, whereas the required majority is 66 percent. However, Oaktree’s bid acquired solely 45 percent backing.
The Priamals are more likely to merge DHFL with their monetary provider’s enterprise as soon as the bid is cleared by the chapter court docket.
After Piramal revised its bid, Oaktree had increased the bid by another Rs 1,700 crore after the deadline. Oaktree, in a letter to the creditors, had claimed a Rs 2,700-crore undervaluation by the CoC.
This amount was then not considered by the CoC, a setback that Oaktree wrote about to both, the administrator R Subramaniakumar and members of the CoC.
Oaktree had also proposed it would offer Rs 1,000 crore from the sale of DHFL’s life insurance business to the lenders.
Piramal Enterprises’ bid at Rs 37,250 crore offers the financial creditors a recovery of around 42 percent.
According to sources, the bid includes Rs 17,700 crore of upfront cash to be paid to creditors and repayment via Non-Convertible Debentures (NCDs) worth Rs 19,550 crore over a period of 10 years.
During the initial stages of DHFL’s resolution process, Piramal Enterprises had decided to bid for only the retail assets of the insolvent company.
Following Adani Properties’ offer to bid for the whole company and a nod from the CoC to allow all players to allow bidders to change their bids, Piramal Enterprises submitted a fresh plan for the entire book of DHFL in the fourth round of bidding on December 14, 2020.
Last Friday, Piramal Capital & Housing Finance said its bid for DHFL offers the highest upfront cash recovery and has the highest score according to the evaluation matrix.
Piramal said it formally submitted a final bid within the deadline, while Oaktree sent an additional offer after the deadline, offering Rs 1,700 crore more.
“Reserving the right in a bidding framework is blatantly illegal and mischievous. if this were to be allowed; everyone will bid Re 1 for all assets, ‘reserve’ the right to increase, look at other bids and increase to slightly more than the highest bid,” Piramal said.
In the first bidding round, Piramal Enterprises offered Rs 15,000 crore for DHFL’s retail arm, while Oaktree offered Rs 27,800 crore for the entire firm.
SC Lowy, meanwhile, offered Rs 2,300 crore for its non-slum redevelopment authority loan book. After the lenders expressed unhappiness over the low bids, all the companies revised their bids significantly.
Lenders and creditors are looking to recover Rs 83,000 crore of unpaid loans of DHFL.