Piramal wins bid for DHFL, set to expand retail lending – Times of India

MUMBAI: Piramal Group has received 94% votes from lenders, placing the conglomerate on course to become the new owner of bankrupt housing finance company DHFL. The US-based Oaktree Capital, which made an aggressive pitch for the company is understood to have received supporting votes from 45% of the lenders.
The troubled housing finance company, which owes Rs 87,000 crore to financial creditors, was an attractive target for Piramal Enterprises as it can help the group achieve its ambitions in retail lending.
Voting for the bids ended at 8pm on Friday. As first reported by TOI in its edition on January 15, public sector banks, which have the bulk of the exposure, had voted in favour of the bid by Piramal. Oaktree had earlier said that it would seek legal recourse if its bid was not considered. In terms of the bid submitted before the December 14 deadline, the total amount promised by Oaktree was Rs 35,700 crore, while Piramal had bid Rs 35,250 crore.

Lenders said that bids cannot be compared simply based on the total amount offered by the bidder. This is because a large part of the bid amount is paid by issuing debentures and the present value of these instruments is determined by their tenure, rate of interest and credit rating.
Lenders can vote for more than one proposal under the insolvency resolution process. The advantage of voting for more than one proposal is that they will continue to get a share of spoils in terms of the resolution plan. If they dissent by not voting for a plan and that bid wins, the dissenting lender will get only the liquidation value. However, in a situation where there are two very close contestants, creditors tend to discuss among themselves on bidding to avoid a tie as such a situation would mean that a very small creditor can swing the decision.
DHFL promoter Kapil Wadhawan was ousted by the RBI and his company was admitted to the National Company Law Tribunal after it turned out that it diverted funds by using software to create fictitious home loan accounts.
Oaktree Capital, which specialises in alternate investments, had first come to the aid of DHFL in 2019 by purchasing wholesale loans worth Rs 1,375 crore to Bombay Dyeing and another developer. Subsequently in the insolvency process, the company had been an aggressive bidder for DHFL.
Industrialist Ajay Piramal, who made his wealth in the pharma industry, exited the business to focus on real estate and finance. This is Piramal’s third attempt to expand in the space through acquisitions. He had first made a failed bid for IL&FS Financial Services long before the group imploded. He subsequently acquired a 20% stake in Shriram Capital and 9.9% in Shriram Transport Finance, which he exited in 2019.

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