Piramal wins bidding for DHFL with 94% of lenders’ votes

MUMBAI: The Piramal Group is set to take over beleaguered the Dewan Housing Finance Corp Ltd after financial creditors voted in favour of its resolution plan, which entails payment of 373 bln rupees to them, leading to a recovery of 43%, according two sources in the know. Insolvency proceedings against Dewan Housing started in December 2019 after the Reserve Bank of India superseded its board.

The lender is the first financial services company that was resolved under Insolvency and Bankruptcy Code. Piramal Group's plan is likely to have secured nearly 94% votes from the committee of creditors, higher than the 66% threshold mandated under the bankruptcy code.

Though the Piramal Group's total bid size is lower than 384 bln rupees of payout proposed by the US-based distressed asset manager Oaktree Capital, the former emerged as the winner based on higher upfront cash payment of 127 bln rupees along with clean and easier structure for takeover Dewan Housing's insurance business.

Oaktree Capital had proposed upfront cash payment of 117 bln rupees but it had offered a shorter payment cycle with issuance of seven-year non-convertible debentures to the creditors. On the other hand, Piramal Group had offered 10-year non-convertible debentures. Piramal Group's bid proposed merging Dewan Housing with Piramal Capital & Housing Finance Ltd.