MUMBAI:Creditors of India’s Dewan Housing Finance Corp have voted in favour of a 372.5 billion rupees ($5.09 billion)takeover bid submitted by the Piramal Group for the troubled “shadow” lender, a source with knowledge of their decision said on Sunday.
DHFL’s creditors finished voting on Friday evening, and the source requested anonymity as the result has not been officially released.
Once one of India’s top “shadow” lenders, DHFL accumulated total debts of almost 1 trillion rupees before defaulting on payments to its creditors.
Three entities – Adani Group, Piramal Group and U.S.-based asset management company Oaktree Capital Management – had been invited to bid for DHFL’s entire loan book.
According to the persons cited above, Oaktree Capital has bid Rs 36,646 crore followed by Piramal group which has offered Rs 35,550 crore (and promises the highest cash payment of Rs 12,700 crore upfront) and Adani has offered Rs 29860 crore to buy the entire portfolio of the mortgage financier.
The Economic Times reported. Oaktree’s offer also includes benefits like quick repayment, higher recovery and direct equity infusion worth Rs 1,500 crore.
Piramal’s offer says it’ll merge its finance business with DHFL to raise its overall net worth. It’ll pay the deferred payments worth Rs 19,550 crore in 10 years, while US-based asset management firm Oaktree will make a deferred payment on bonds worth Rs 21,000 crore, along with upfront payment of Rs 11,646 crore.
After making a late entry (in round three of bidding), Adani Group’s offer totals Rs 33,110 crore, with Rs 10,750 crore upfront cash payment and deferred payments worth Rs 19,110 crore in the next seven years.
Adani Group, Piramal Group, US-based asset management company Oaktree Capital Management and Hong Kong-based SC Lowy are the four entities that submitted bids for DHFL in October. In the initial offer, Adani Group bid only for DHFL’s wholesale and Slum Rehabilitation Authority (SRA) portfolio.
However, DHFL’s committee of creditors sought fresh bids from all four bidders by December 14 on the advice of former attorney general of India Mukul Rohatgi. Bidders also had the freedom to bid either for a portion of the loan book or the entire portfolio. The creditors getting DHFL auctioned to recover unpaid loans wanted suitors to revise their bids as original offers were low.
In the revised bid, Adani Group bid for the entire book, offering a total of Rs 30,000 crore plus interest of Rs 3,000 crore on November 17. This was more than Rs 28,300 crore offered by Oaktree. Piramal quoted Rs 23,500 crore only for the retail portfolio of DHFL, while SC Lowy bid Rs 2,350 crore for SRA.
All three rival bidders had cried foul over Adani’s bid, saying the group had submitted the bid past the deadline and sought disqualification of Adani.
DHFL is the first financial services company that was sent to NCLT under the insolvency and bankruptcy code (IBC). DHFL is facing claims of Rs 87,031 crore from lenders including State Bank of India (including SBI Singapore) with Rs 10,083 crore exposure; Bank of India Rs 4,125 crore; Canara Bank Rs 2,681 crore, among others.
DHFL had total assets amounting to Rs 79,800 crore as of March 2020, as per its annual report. Of these, Rs 50,227 crore of assets forming 63 per cent of the total portfolio were reported as non-performing assets, and its retail book stood at Rs 33,500 crore.
With Reuters Inputs