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DHFL may get a new owner by January-end; advantage Piramals due to ‘local’ factor

CoC meeting underway to decide the winner as Piramals and Oaktree submit almost at par bids.

December 31, 2020 / 04:05 PM IST
DHFL (File Image: PTI)

DHFL (File Image: PTI)

The crucial voting to decide the winning bidder for beleaguered mortgage lender Dewan Housing Finance Corporation Ltd (DHFL) has begun among the committee of creditors (CoC) and is due to be wrapped up by January 15.

After the voting ends, the winning bidder may be announced by the end of January, said two persons familiar with the process.

Piramal Enterprises, a diversified Indian conglomerate, and American asset management company Oaktree have both made bids in the range of Rs 37,000-38,000 crore. The cash components are also almost identical, at about Rs 17,000 crore each.

But the Piramals may get the advantage by virtue of being an established ‘local firm’ if both bids are weighed at the finishing line beyond the equal bid amounts, said one of the persons quoted above.

“Right now, the bid amounts are almost at par after the revised offers. While money is important, money alone won’t be the deciding factor at the final phase. CoC may find the Piramals more acceptable being an established local corporate group,” said one of the persons quoted above.


What happens after the CoC vote?

Once the CoC completes the voting process, lenders will again meet to discuss the outcome and decide the winning bidder based on both financial and non-financial parameters, said the second person. “There will be a whole lot of metrics that will come into play if there is a match on the money offered. Oaktree is an investor which has put money on the table but Piramal has an added advantage of being a local group,” said this person.

Both individuals spoke to Moneycontrol on condition of anonymity.

The Piramals and Oaktree revised bids in the last round by about Rs 1,700 crore each to make an aggressive bid for the once famed mortgage brand, promoted by the Wadhawans. Adani Group is the third active bidder.

DHFL collapsed under the weight of a severe liquidity crunch after the collapse of IL&FS in late 2018 and couldn’t recover from the low point subsequently.

Adding to its woes, investigations were launched against the Wadhawans on various charges relating to financial irregularities and unholy nexus with the underworld in relation to certain real estate transactions. Subsequently, DHFL was pushed to the NCLT court in December 2019. Since then, the creditors to the company are attempting for a resolution. They haven’t been successful so far.

DHFL owes Rs 91,000 crore to its creditors. State Bank of India is the biggest creditor to DHFL with an exposure of around Rs 10,000 crore. Bank of India has around Rs 4,125 crore exposure to DHFL, Canara Bank Rs 2,681 crore, NHB Rs 2,434 crore, Union Bank of India Rs 2,378 crore, Syndicate Bank Rs 2,229 crore and Bank of Baroda Rs 2,075 crore. Indian Bank’s Rs 1,552 crore is stuck with DHFL while Central Bank (Rs 1,389 crore), IDBI Bank (Rs 999 crore), and HDFC Bank (Rs 361 crore) make up the rest of the creditors. These figures may have changed by now to account for accrued interest.

Meanwhile, former promoter Kapil Wadhawan has repeated his offer for settlement in a letter to RBI Governor Shaktikanta Das on December 29. “I earnestly request the RBI to place my proposal, through the Administrator, to the CoC for its immediate consideration and for my proposal to be voted upon along with the bids submitted by the other bidders,” Wadhawan said. “Considering the paucity of time, I would request the CoC to, in any event, consider my proposal and at least vote upon it,” Wadhawan said.
Dinesh Unnikrishnan
first published: Dec 31, 2020 04:05 pm
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