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CNBC-TV18 Exclusive: Piramal Group wins bid for DHFL with almost 94% votes, say sources

Updated : January 18, 2021 08:09 AM IST

Oaktree Capital and Piramal Group were seen as front-runners to acquire DHFL

Billionaire Ajay Piramal led Piramal Capital & Housing Finance Limited (PCHFL) has emerged as the winning bidder for Dewan Housing Finance Limited (DHFL), after almost 94 percent of the creditors voted in its favour, multiple people aware of the development told CNBC-TV18.

Oaktree Capital's resolution plan secured only 45 percent of votes from the creditors committee, people familiar with the matter said.

To be declared the winning bidder, the resolution plan has to secure the highest share of votes from the creditors committee, subject to a minimum of 66 percent votes. The CoC voted on plans submitted by all 4 suitors.

The voting concluded after six rounds of an intense bidding war between the suitors. While the creditors committee’s vote gets Piramal Group one step closer to the takeover of DHFL, the deal may be far from done. Several people closely involved in the matter opined that because of the apparent strife between the suitors throughout the process, no matter which proposal the CoC selects, the other bidders are expected challenge the takeover in court.

The CoC had put all six plans to vote, including one each from Piramal Group, Oaktree Capital and Adani Group under Option I for the entire DHFL book, another bid from Piramal Group for the retail portfolio, Adani for the wholesale & slum rehabilitation portfolios, and from Hong Kong-based SC Lowy for the wholesale portfolio.

Oaktree Capital and Piramal Group were seen as front-runners to acquire DHFL with the highest offers of the four suitors that came forward, CNBC-TV18 had reported.

Piramal Group's plan promises recovery of almost 43 percent to the creditors of DHFL.

As per the resolution plan put to vote, which CNBC-TV18 has reviewed a copy of, Piramal Group offered Rs 37,250 crores in total to acquire DHFL. This includes Rs 12,700 crores as upfront cash which factors in Rs 150 crores to Fixed Deposit (FD) holders, another Rs 3,000 crores upfront from the interest earned on the cash on DHFL’s books, Rs 1,000 crores of interest income after NCLT approval and another Rs 1,000 cr by way of value ascribed to the insurance business. Piramal Group’s offer also includes Rs 19,550 crores in the form of debt instruments spread over 10 years.

Against this, Oaktree offered Rs 38,400 crores, including a Rs 1700 crore addition in the bid. The additional Rs 1,700 crore offer was challenged by rival Piramal, who claimed Oaktree made the revision on December 24, after the bid deadline had closed. This included Rs 17,100 crores in the form of upfront cash, insurance business value, interest earned on cash, etc. Oaktree’s offer also included Rs 300 cr for FD holders, and Rs 21,000 crores in the form of debt instruments spread over 7 years.

DHFL is the first financial services firm to have been sent to NCLT under the Insolvency and Bankruptcy Code (IBC), and will set the precedent for other stressed financial sector entities. The entire resolution process has been mired in controversy, with unsolicited offers, bickering between suitors, conflict of interest issues with legal advisors to the firm, and the promoter facing allegations of fraud.

The company is facing claims of over Rs 87,000 crores, with almost Rs 38,000 crores in the form of bank loans alone. State Bank of India, Union Bank of India, Bank of Baroda, Indian Bank and several others have exposure to the troubled mortgage lender.

Published : January 17, 2021 05:28 PM IST

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