The Piramal group is all set to bag the troubled Dewan Housing Finance Company (DHFL), with lenders led by public sector banks backing its Rs. 37,250 crore bid for the takeover of the mortgage agency.
In keeping with banking sources, banks weren’t favour of clearing the bid by the US’ Oaktree Capital, which has been in a fierce battle with the Piramalss for the housing finance agency. The Piramal bid received 94% voting from the lenders, whereas the required majority is 66%. Nonetheless, Oaktree’s bid received solely 45% backing. The Piramals are prone to merge DHFL with their monetary providers enterprise as soon as the bid is cleared by the chapter courtroom.
The Committee of Collectors (CoC) is anticipated to formally clear the proposal within the coming days and ahead it to the Nationwide Firm Legislation Tribunal.
After Piramal revised its bid, Oaktree had elevated the bid by one other Rs. 1,700 crore after the deadline. Oaktree, in a letter to the collectors, ahs claimed an Rs. 2,700-crore undervaluation by the CoC. Oaktree had additionally proposed it might provide Rs. 1,000 crore from the sale of DHFL’s insurance coverage enterprise to the lenders.
Final Friday, Piramal Capital & Housing Finance mentioned its bid for DHFL affords the best upfront money restoration and has the best rating based on the analysis matrix. Piramal mentioned it formally submitted a last bid throughout the deadline, whereas Oaktree despatched an extra after the deadline, providing Rs. 1,700 crore extra.
Realising that its bid falls severely brief, Oaktree despatched an electronic mail on December 24 two days after the deadline providing an extra Rs. 1,700 crore, Piramal mentioned. “Reserving the precise in a bidding framework is blatantly unlawful and mischievous if this have been to be allowed; everybody bid Rs. 1 for all belongings, ‘reserve’ the precise to extend, have a look at different bids and enhance to barely greater than the best bid,” Piramal mentioned.
Oaktree’s bid had reportedly claimed that DHFL’s NCDs can be assigned an “AAA” score if their decision plan is accepted. Nonetheless, score companies will not be allowed; by legislation to supply any “credit score opinion” or have “indicative credit standing dialogue”, Piramal mentioned. Piramal had mentioned the proposed takeover of DHFL’s insurance coverage enterprise; by Oaktree might invite regulatory challenges as it’s a overseas entity. At the moment, 49% of DHFL Pramerica Life Insurance coverage owned as a overseas funding by Prudential Worldwide Insurance coverage Holdings.
On November 29, 2019, The Reserve Financial institution of India (RBI) filed an utility for initiation of insolvency in opposition to DHFL, making it the primary non-banking monetary firm (NBFC) to bear the method. Within the first bidding spherical, Piramal Enterprises supplied Rs. 15,000 crore for DHFL’s retail arm, whereas Oaktree supplied Rs. 27,800 crore for the whole agency. SC Lowy, in the meantime, supplied Rs. 2,300 crore for its non-slum redevelopment authority mortgage e book. After the lenders expressed unhappiness over the low bids, all the businesses revised their bids considerably.
Lenders and collectors need to get better Rs. 83,000 crore of unpaid loans of DHFL.