Money & Banking

DHFL bid: Oaktree clarifies stance on 3 key issues to lenders

Our Bureau Mumbai | Updated on December 23, 2020

Raises concern on fairness and transparency of resolution process

Concerned about the fairness and transparency of the bidding process for Dewan Housing Finance Corporation Ltd (DHFL), Oaktree Capital has written to the Committee of Creditors (CoC), saying it hopes the resolution process will be completed “positively and in the correct manner”.

Also read: Last-minute hardsell: Bidders write to DHFL administrator

In the recent letter, Oaktree has also underlined that its bid exceeded the next bid by ₹1,150 crore on a notional basis and ₹1,478 crore on a net present value basis. “In addition, Oaktree is offering ₹300 crore of incremental value to retail fixed deposit holders in response to various requests received by Oaktree,” the letter pointed out.

Also read: Kapil Wadhwan tells DHFL administrator his offer is higher than revised bids

It further said its bid has been the subject of a sustained campaign to undermine its value over three key issues — the conditionality of the bid, the legality of Oaktree as a foreign investor indirectly holding a majority stake in Pramerica Life Insurance Ltd (PLIL), and Oaktree as a foreign investor representing an implementation risk. PLIL is a joint venture between DHFL arm DHFL Investments Ltd (DIL) and Prudential International Insurance Holdings, Ltd.

Makes clarifications

Oaktree clarified its position on all the three issues to the CoC, stressing that it has presented an unconditional and irrevocable bid, conditional only on NCLT and regulatory approval.

It further said that if DFHL’s shareholding in DIL is not disposed of prior to the implementation of the resolution plan, Oaktree intends to transfer DIL’s shareholding in PLIL into the ownership of an Indian-owned and -controlled alternative investment fund. “The existence of the PLIL shareholding is not a new issue,” it said.

Further, noting that it is a priority of the government to attract foreign investment into India, Oaktree said, “Foreign investors do not expect to be invited to participate in an auction process, and then be discriminated against on the basis that they are not domestic entities. Foreign investors simply will not understand how the highest bid could not be the winning bid.”

It also said the resolution process has been opaque, with shifting parameters and instructions have been unclear.

Published on December 23, 2020

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