Piramal’s bid for DHFL gets RBI green signal

February 19, 2021 3:15 AM

Piramal’s resolution plan will enable lenders to recover around 40% of their dues, out of the total admitted claims at Rs 87,082 crore as per sources.

Piramal Enterprises in its December quarter earnings (Q3FY21) said that total consideration of Rs 34,250 crore for DHFL included Rs 14,700-crore upfront cash and non-convertible debentures (NCDs) of Rs 19,550 crore.Piramal Enterprises in its December quarter earnings (Q3FY21) said that total consideration of Rs 34,250 crore for DHFL included Rs 14,700-crore upfront cash and non-convertible debentures (NCDs) of Rs 19,550 crore.

By Ankur Mishra

Piramal Capital and Housing Finance (PCHFL) has received a nod from the Reserve Bank of India (RBI) to take over Dewan Housing Finance Corporation (DHFL). The regulator has cleared Piramal’s bid for the stressed mortgage financier under its ‘fit and proper’ framework, sources said. The administrator at DHFL will now move the National Company Law Tribunal (NCLT), Mumbai, to seek approval of PCHFL’s resolution plan for DHFL. With a total consideration of Rs 34,250 crore, PCHFL’s resolution plan had received 94% votes by committee of creditors (CoC). Piramal’s resolution plan will enable lenders to recover around 40% of their dues, out of the total admitted claims at Rs 87,082 crore as per sources.

Piramal Enterprises in its December quarter earnings (Q3FY21) said that total consideration of Rs 34,250 crore for DHFL included Rs 14,700-crore upfront cash and non-convertible debentures (NCDs) of Rs 19,550 crore. In an interaction with analysts after earnings, the management disclosed that it expected DHFL transaction to close by mid-June this year.

Rajesh Laddha, executive director (ED) and group chief financial officer (CFO) at Piramal Enterprises, said, “If there are not any significant litigations, we expect the process to get over in 2-3 months’ time, which will take us to April-May.” He further said that it would be around 30-45 days process after that to close the deal. “So, I think it will be around May-end or mid-June for the merger to get completed.”
As per resolution plan submitted to lenders, Piramal will delist the shares of DHFL and merge it with PCHFL.

Of the total admitted claims of Rs 87,082 crore, SBI is the lead creditor to DHFL with Rs 7,107-crore exposure. JP Morgan in its report on SBI said, “We estimate recovery from two large accounts (DHFL and Bhushan Steel) can net SBI an added Rs 8,000 crore and sustain earnings momentum into Q4FY21 and provide additional buffer on provisions given these are written off accounts.”

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