Piramal’s bid for DHFL stood at Rs 37,250 crore as against American asset management company Oaktree’s Rs 38,400 crore, but the Piramal Group’s offer had higher upfront cash payment, which is likely to have appealed to the creditors
Sanjhi Soch Beauro –The intense bidding war for beleaguered mortgage lender Dewan Housing Finance Corporation (DHFL) has been won by at the end of voting by the Committee of Creditors (CoC) on Friday, reported moneycontrol.com quoting a person familiar with the development.
“CoC is understood to have favoured the Piramals,” said the person, who is intimately aware of the bidding process. The person didn’t want to be named.
* According to another person in the know, the Piramals got over 94 per cent votes, way above the minimum 66 per cent votes required.
* Piramal’s bid for DHFL stood at Rs 37,250 crore as against American asset management company Oaktree’s Rs 38,400 crore, but the Piramal Group’s offer had higher upfront cash payment, which is likely to have appealed to the creditorsOaktree secured around 45 per cent votes, according to the person quoted above
Besides the financial aspects, creditors are also likely to have evaluated the non-financial part of the bids such as regulatory compliance, company track records and future action plan, etc, according to officials who are in the know
* According to sources, Piramal being a local firm would have helped it find favour from the DHFL creditors
PIRAMAL GROUP’S PITCH
* Piramal Group had on Monday listed out 10 factors to bolster its claim that its bid has more value compared with that of Oaktree
* In a statement, the conglomerate said it offers the higher upfront cash and has the highest score on the COC-mandated scorecard. Also, Oaktree’s offer has multiple legal issues such as the ones on the insurance business of DHFL and claims on the rating of their instruments, Piramal said.
* Making a strong pitch, Piramal said it has also followed all the process guidelines so far and has not violated any norms laid out by the CoC
* Piramal said its bid has an implementable straight offer of Rs1,000 crore for the insurance business, payable at DHFL level. This is unlike the Oaktree offer which is payable at the level of a subsidiary (DIL), with no clear path to extract that amount for the benefit of the DHFL lenders
* Among other things, the diversified Indian conglomerate stressed that it is an Indian company, with strong ties with Indian society, and over Rs30,000 crore of equity invested in India at this point.
DHFL AWAITS NEW OWNER
* DHFL collapsed under the weight of a severe liquidity crunch after the collapse of Infrastructure Leasing & Financial Services (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 National Company Law Tribunal (NCLT) court in December 2019. Since then, the creditors to the company are attempting for a resolution.
* DHFL owes around 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. Other lenders include Bank of India, Canara Bank, NHB, Union Bank of India, Syndicate Bank, and Bank of Baroda
