Piramal Wins Bid For DHFL

Creditors voted in favour of the Piramal plan by an overwhelming majority.

DHFL logo seen through a tyre. (Source: BloombergQuint) 
DHFL logo seen through a tyre. (Source: BloombergQuint) 

Creditors to Dewan Housing Finance Corporation Ltd. have voted in favour of a resolution plan submitted by the Piramal Group, two people with direct knowledge confirmed. The Piramal Group beat Oaktree Capital and the Adani Group to win the bid.

The sixth round of voting on resolution plans for DHFL closed at 8 p.m. on Friday, with 93.5% of creditors voting in favor of the Piramal Group. Competing bidder Oaktree Capital Management managed to get only 45% of the votes, the people quoted above said.

As per the voting guidelines laid down, a creditor is allowed to vote for more than one plan. According to the first of the two people quoted above, creditors representing 6.5% of the votes abstained from selecting any bidder.

Messages sent to R Subramaniakumar, RBI appointed administrator at DHFL, and representatives at Oaktree Capital and Piramal Group did not yield a response.

The Piramal Group has offered Rs 37,250 crore as part of their settlement offer to DHFL’s creditors, BloombergQuint reported earlier. This includes 12,700 crore in upfront cash, Rs 3,000 crore in interest income already on DHFL’s books, as well as Rs 19,550 crore worth of non-convertible debentures to be repaid over 10 years.

In comparison, Oaktree Capital was offering Rs 38,400 crore, which included Rs 11,700 crore in upfront cash, Rs 3,000 crore worth interest income and Rs 21,000 crore worth debentures to be repaid over seven years. Oaktree Capital increased its offer by Rs 2,700 crore after the bidding deadline had passed.

The vote concludes a long resolution process that began in November 2019 after the Reserve Bank of India referred DHFL for insolvency. Lenders have had to redo the voting process nearly six times as new bidders emerged and existing bidders changed offers. Both Piramal and Oaktree have also warned creditors of litigation as both sides questioned parts of the bidding process.

Piramal Wins Bid For DHFL

The process saw companies alter their offers in the last three months during the bidding process. In November, Adani Group wrote to creditors seeking to materially change its bid. The Gautam Adani-owned bidder was earlier looking to bid only for DHFL’s wholesale lending portfolio, but it later agreed to cover the entire loan book.

The change prompted Piramal Group to raise an official complaint with the creditors, warning it would be forced to take legal recourse if one bidder is allowed to change its offer. At the time, Piramal Group had offered to buy DHFL’s retail lending portfolio. Oaktree Capital and SC Lowy were also against such changes.

To avoid litigation and to give all bidders a fair chance, the creditors allowed everyone to change their offers. This saw Piramal Group, Oaktree Capital and Adani Group offer to buy the entire loan book. SC Lowy decided to not pursue its bid as it felt that the process was not fair.

Piramal Wins Bid For DHFL

Piramal Group and Oaktree Capital continued to make changes, and wrote multiple letters to the financial creditors.

On Jan. 6, Oaktree Capital wrote that it had submitted a superior offer and urged lenders to vote for it. It highlighted that the additions made in its offer after the bidding deadline were valid and should be fairly considered by them. The financial creditors have a duty to vote for the plan offering the highest return, it said. BloombergQuint reviewed a copy of this letter.

While Oaktree Capital said it reserves the right to litigate against the outcome of the bidding process, the courts in India usually favour the commercial wisdom of the committee of creditors.