Money & Banking

DHFL win likely to sharpen Piramal’s retail focus

Surabhi Mumbai | Updated on January 17, 2021

Challenges continue with pending cases; Oaktree may also file a legal plea

Emerging as the preferred bidder for Dewan Housing Finance Corporation Ltd (DHFL) is likely to help the Piramal Groups expand in the real estate and lending segment, particularly the retail space.

In a regulatory filing on Sunday, DHFL said the resolution plan submitted by Piramal Capital and Housing Finance Limited has been approved by the Committee of Creditors by majority voting.

 

According to the resolution plan, Piramal will merge its existing financial services business with DHFL.

The merged entity is expected to focus mainly on the retail real estate and lending space.

Analysts point out that Piramal Enterprises Ltd has been cutting down its large corporate exposures and also expects it to grow the consumer lending business.

 

“Over the past one to two years, the management focused on running down large corporate exposures, infusing capital, and increasing share of long-term borrowings in the NBFC segment,” said a recent note on Piramal Enterprises by Motilal Oswal, adding that over the next one to two years, the key priority is to grow its recently launched consumer lending business.

In addition to home loans, it looks to undertake LAP and small business loans, it further noted.

For the quarter ended September 30, 2020, Piramal Enterprise Ltd’s revenue from the financial services business was down five per cent year-on-year (y-o-y) at ₹ 1,861 crore.

Challenges remain

However, the resolution process could take some time to be completed with a possible legal challenge by Oaktree Capital, which had contended that its bid had the highest net present value.

The global alternative investment management firm had previously indicated that it could explore such an option if its bid was not taken seriously by the Committee of Creditors.

Oaktree declined to comment on an email query sent by BusinessLine on the issue.

Meanwhile, several cases are also pending in the National Company Law Tribunal.

The National Housing Board has moved the NCLT seeking a higher share in the resolution proceeds.

The Committee of Creditors have voted in favour of setting aside Rs 2,436.67 crore for the interim arrangement with NHB.

Another case filed by 63 Moons Technologies is also pending with NCLT while another filed by DHFL’s fixed deposit holders will also be taken up for hearing by the NCLT on January 20.

Published on January 17, 2021

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