Adani, Piramal, Oaktree and SC Lowy submit bids for troubled DHFL

Topics DHFL | Adani Group | Piramal Group

Four entities — Adani Group, Piramal Group, US-based asset management company Oaktree Capital Mangement, and SC Lowy — have submitted bids for Dewan Housing Finance Corporation (DHFL).

While Oaktree submitted a bid for the entire company, others bid for select portfolios.

While Adani Group has submitted bids only for the construction finance portfolio and slum rehabilitation loans, Piramal Group has bid for the retail portfolio, and SC Lowy for the construction finance business, putting it in competition with Adani Group. 

The slum development portfolio provides funding for large projects under the Slum Rehabilitation Authority (SRA) scheme located in prime areas of Juhu in Mumbai.

Assets under the construction category are loans provided to real estate developers for projects primarily in Tier I cities, with 15 projects accounting for 71 per cent of the books.

A banking source said all the four companies had made conservative bids, taking into account the slowdown in real estate and the Covid-19 pandemic.

“The only surprise was the Oaktree bid, while the ones of the Adani and Piramal groups were on expected lines,” said the source.
“Banks will have to take a massive hit on their exposure to DHFL,” the person added.

The bids were muted owing to a forensic audit report by Grant Thornton, which revealed a Rs 14,500-crore hole in DHFL’s books.
The report, which has been submitted to the National Company Law Tribunal (NCLT), has said there is a Rs 9,320-crore hole in the wholesale books, a Rs 1,707-crore loss on the SRA account, and another diversion of Rs 3,000 crore in retail loans.
Recovering these loans is doubtful, the report said.

In February this year, almost 24 companies had evinced an interest in DHFL. They included AION Capital, Adani Capital, Hero FinCorp, KKR Credit Advisors, Oaktree, Morgan Stanley, Goldman Sachs Group, Inc., Deutsche Bank AG, Warburg Pincus LLC, SSG Capital Advisors, LLC, Edelweiss, Lone Star, and Blackstone.

Indian lenders, mutual funds, and provident fund have an exposure of Rs 88,000 crore to the company. Of this, State Bank of India has an exposure of Rs 10,000 crore.

In the auditor’s report for 2019-20, it said the wholesale loan portfolio aggregating Rs 49,585 crore had been valued as of March 31 at Rs 30,732 crore, with the resulting fair value loss of Rs 18,853 crore.

DHFL was the first company to be referred to the NCLT by the Reserve Bank of India in November last year under the special power under Section 227 of the Insolvency and Bankruptcy Code.

The NCLT ordered insolvency proceedings in December. The company’s promoters are facing multiple investigations by the Central Bureau of Investigation, Enforcement Directorate and others for fraud and money laundering.

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