Money & Banking

DHFL lenders staring at ₹65,000-crore haircut

Our Bureau. Mumbai | Updated on October 18, 2020

SBI-led bankers owed ₹85,000 cr, but the highest bid has come in at just ₹20,000 cr

Lenders to Dewan Housing Finance Corporation Ltd (DHFL) may have to take a ₹50,000-65,000 crore haircut, with none of the four bidders offering more than ₹20,000 crore to acquire the debt-laden housing finance company (HFC) under the Insolvency and Bankruptcy Code (IBC).

Also read: ED files rejoinder in SC opposing bail to DHFL promoters

The bidding process ended on Saturday with offers submitted by Adani Group, Piramal Enterprise, US-based distressed asset fund Oaktree Capital and Hong Kong’s private banking firm SC Lowy.

According to sources, the pandemic and economic downturn as well as the alleged fraud detected at the Housing Finance Company could have made some of the initial bidders rethink the bid amount as well as the bid itself. “The situation is such that for a company to put in a huge investment may be difficult,” noted a source, adding that in the case of DHFL, the probe into the alleged fraud adds to the uncertainty.

Oaktree is understood to be the only bidder to have offered to acquire the entire company, for ₹20,000 crore. This would potentially mean banks may have to write off ₹65,000 crore, as DHFL’s liability is estimated at ₹85,000 crore. It has cash-in-hand of about ₹10,000 crore.

Also read: Race for DHFL’s assets may be down to Piramal, Adani, Welspun

Bids for portfolios

Adani has bid for DHFL’s wholesale portfolio, estimated at ₹40,000 crore, as well as the slum redevelopment assets portfolio. The bid value is, however, just ₹3,000 crore, according to sources. Piramal Enterprises is understood to have submitted a bid for DHFL’s retail portfolio, quoting ₹12,000 crore for the business and asking for 18 per cent yield on it.

Sources said SC Lowy’s bid is the lowest and comes with caveats.

Welspun was expected to bid but did not. Though a number of foreign investors hadshown interest in acquiring DHFL’s assets, the fraud charges may have put them off, the sources said. Investigations have revealed a whopping 2.6 lakh fake accounts in a Mumbai ‘branch’ that did not exist.

When contacted, Adani, Piramal and Oaktree declined to comment. SC Lowy did not respond to emails from BusinessLine.

Last November, DHFL became India’s first financial sector firm to go to the IBC. The pandemic and the lockdown disrupted the process and the deadline for bid submission was repeatedly postponed.

Published on October 18, 2020

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