Piramal Group is all set to delist the shares of the Dewan Housing Finance Corp. Ltd (DHFL), according to the people aware of the plan. Piramal has also decided to merge the home financier with Piramal Capital Housing Finance Ltd. Because of the plan, thousands of the shareholders of DHFL are set to be wiped out. Unlike a regular delisting process, the proposed plan does not envisage any offer to buy out the shares held by the investors, thus can lead to major losses for the stockholders of DHFL.
Shares of DHFL were trading at 28.75, down by 1.50 points or 4.96 percent at 10:13 am on Thursday, January 21 on the Bombay Stock Exchange (BSE). Similarly, the shares were at 28.80, down by 1.50 points or 4.95 percent on the National Stock Exchange (NSE).
Over the past few months, thousands of retail investors have bought the shares of the Dewan Housing Finance Corp. Ltd with a hope to gain from the delisting offer. In the past three months, the shares of the bankrupt mortgage lender have doubled. As of December 31, the retail public shareholding in DHFL rose to 39.12 percent from 36.46 percent a year ago.
According to the proposal by Piramal Group, the delisting will take place after the bankruptcy court’s approval. The company has also not made any provision to buy out shareholders of DHFL.
On January 16th, Piramal Group's bid to take over the entire business of DHFL was approved by the latter's committee of creditors. The bid was of over Rs 38,250 crore, out of which most of the capital will go to the lenders including banks, non-bank lenders and bondholders.
An upfront payment offer of Rs 12,700 crore has already been made by Piramal to DHFL’s creditors. As per the proposal, non-convertible debentures worth Rs 19,550 crore will also be issued to the lenders. During the period between NCLT's approval and its actual implementation, an interest income of Rs 1,000 crore will also be paid to the creditors, as per the proposal of Piramal.
If the offer by Piramal Group gets accepted, the consortium of lenders led by the State Bank of India (SBI) will recover about 41 percent of the dues. DHFL owes around Rs 85,000 crore to them.