Piramal gains creditors’ assent to acquire DHFL
MUMBAI : The Piramal Group is set to acquire Dewan Housing Finance Corp. Ltd (DHFL), with 94% of the bankrupt home financier’s creditors voting in favour of a bid by the Ajay Piramal-led group that has committed ₹38,250 crore to take over the assets of the mortgage lender.
The National Company Law Tribunal (NCLT) will now have to approve the winning bid.
Us-based debt fund manager Oaktree Capital Management LP, which has been the closest contender of Piramal in the aggressive four-month-long bidding battle for India’s first insolvency case for a shadow lender, received 45% of the votes, two people with direct knowledge of the matter said on condition of anonymity.
“There are about 150,000 DHFL creditors in total, including bondholders, banks and NBFCS. They had an option to vote for more than one resolution plan. In total, there were five plans that were put up for voting. Many creditors have voted in favour of both the offers made by Piramal and Oaktree on December22, in which both the bidders made an offer to buy DHFL’S entire business. The voting has gone in favour of the final commitment that was made by Piramal on December22,” one of the two people said.
“Piramal’s offer involves higher cash component upfront, an easy merger process and better synergies due to the group’s experience in India in the lending and housing sectors. Piramal’s offer for the insurance arm of DHFL is a cleaner route than the indirect AIF (alternative investment fund) route proposed by Oaktree even though Oaktree is a well-reputed global brand. All this may make the resolution process faster, and therefore, creditors have possibly voted in favour of Piramal,” the first person said.
Oaktree, which had offered ₹32,700 crore in the fourth round of bidding, increased its overall commitment to ₹36,400 crore in the sixth and final round of bidding.
Until the fourth round, Oaktree’s bid was the highest, while Piramal’s was second at ₹32,250 crore.
On December 27, Mint first reported that Piramal Group had emerged as the frontrunner to acquire DHFL as per the stipulated evaluation matrix prepared by investment banker SBI Capital Markets Ltd and the committee of creditors.
DHFL’S resolution is critical since it will set a precedent for future insolvency cases in the lending sector.
If the NCLT approves Friday’s votes, it may help the government decide how to resolve insolvency cases in the nonbanking financial services sector. Infrastructure Leasing and Financial Services Ltd (IL&FS) and DHFL are two such cases that are awaiting resolution.
While the government has chosen to supersede the board of IL&FS and monetise its assets in parts to repay its creditors, the Reserve Bank of India has chosen the bankruptcy resolution route in DHFL’S case.
According to the evaluation matrix based on a formula stipulated under IBC, the committee of creditors found Piramal Group’s total score to be 93.99 points on a scale of 100, while Oaktree scored 85.07 points.
On the quantitative matrix, Piramal has scored 78.99, while Oaktree has scored 70.07 marks on a scale of 85.