Piramal Group completes DHFL buy, pays Rs 34,250 cr

TRANSACTION MARKS FIRST SUCCESSFUL COMPLETION OF IBC RESOLUTION IN FINANCIAL SECTOR

Piramal Enterprises (PEL) said it has completed acquisition of Dewan Housing Finance (DHFL) by paying Rs 34,250 crore to creditors of the troubled housing finance company.

The company said the creditors of DHFL, including fixed deposit (FD) holders, would recover an aggregate amount of Rs 38,000 crore from the resolution process of DHFL.

The amount comprises approximately Rs 34,250 crore to be paid by Piramal Capital and Housing Finance Ltd. (PCHFL) as a combination of cash and NCDs, and around Rs 3,800 crore which is the entitlement of creditors as per the resolution plan from the cash balance available with DHFL, the company said.

Speaking about the announcement,

Piramal Group Chairman Ajay Piramal said the transaction marks a successful closure of the first resolution under the IBC rules in the financial services sector and sets a precedent for future resolutions.

"We have now made the payment of the consideration amount. In value terms, the transaction is amongst the largest resolutions till date. We will merge PCHFL and DHFL and the merged entity will be called Piramal Capital and Housing Finance Limited," he told reporters.

For the closure of this transaction, all the necessary regulatory approvals have been received, Piramal said, adding that the merger will take place in the next couple of weeks.

The merged entity will be 100 per cent owned by Piramal Enterprises Ltd.

The total consideration paid by the Piramal Group of Rs 34,250 crore includes an upfront cash component of Rs 14,700 crore and issuance of debt instruments of Rs 19,550 crores (10-year NCDs at 6.75 per cent per annum on a half-yearly basis.

Piramal said there were 70,000 creditors of DHFL and most of them are recovering approximately 46 per cent of their pending dues through the successful completion of this process.

He said the group's financial services business is more than adequately capitalised to fund the transaction.