Piramal Group emerged as the preferred bidder for troubled mortgage lender Dewan Housing Finance Corporation (DHFL) after the voting by the Committee of Creditors (CoC) ended on January 15.
“CoC is understood to have favoured the Piramals,” Moneycontrol quoted a person who is intimately aware of the bidding process.
According to the report, the Piramal Group bagged over 94 per cent votes, way past the required minimum of 66 per cent votes. Meanwhile, the other suitor, US-based Oaktree Capital, secured around 45 per cent votes. Oaktree’s total bid for DHFL stood at Rs 38,400 crore against Piramal’s Rs 37, 250 crore. What seems to have appealed to the creditors is the fact that Piramal’s offer had higher upfront cash payment.
Voting was done on various parameters, including qualitative and quantitative. After this, the Committee of Creditors (CoC) is likely to meet to take a final call and send its recommendation to the NCLT, the sources added. Since the conclusion of the fifth and final round of the bidding process last month, Piramal Enterprises and Oaktree Capital each claimed that their bid was the highest and fully implementable.
The Piramal Group had on Saturday claimed that its bid provides better offer to over 55,000 retail fixed deposit holders of the debt-ridden mortgage lender than the one made by Oaktree Capital, which claimed that they will give Rs 300 crore extra to FD holders, compared to the Rs 150 crore promised by Piramal so far. Over 55,000 retail customers and institutions hold Rs 5,400 crore of fixed deposits in DHFL.
Earlier, the Piramals had asserted that their bid had the highest score on the CoC evaluation matrix and is fully compliant with all regulatory norms.
Highlighting the disadvantages for Oaktree, the Piramal group had said, “The payment structure offered by Oaktree is complex. Since Oaktree is a foreign institution, they face severe legal challenges in owning and selling the insurance business which is already at the maximum permissible foreign ownership limit of 49 per cent."
In November 2019, the Reserve Bank referred Dewan Housing Finance Limited (DHFL), the third-largest pure-play mortgage lender, to the National Company Law Tribunal (NCLT) for insolvency proceedings.
DHFL was the first finance company to be referred to the NCLT by RBI using special powers under Section 227 of the IBC. Prior to that, the company’s board was superseded and R Subramaniakumar was appointed as the administrator. He is also the resolution professional under the Insolvency and Bankruptcy Code (IBC).
As of July 2019, the company owed Rs 83,873 crore to banks, the National Housing Board, mutual funds and bondholders.
Its large lenders are SBI, including SBI Singapore with Rs 10,083 crore exposure. Others are Bank of India (Rs 4,125 crore), Canara Bank (Rs 2,681 crore), NHB (Rs 2,434 crore), Union Bank (Rs 2,378 crore), Syndicate Bank (Rs 2,229 crore), Bank of Baroda (Rs 2,075 crore), Indian Bank (Rs 1,552 crore), Central Bank (Rs 1,389 crore), IDBI Bank (Rs 999 crore) and HDFC Bank (Rs 361 crore).
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 or 63 per cent of the total portfolio was reported as gross NPAs.