Oaktree Capital, Piramal Group raise offers for bankrupt DHFL yet again

Topics DHFL | Piramal | Bankruptcy

Piramal said it is offering more to lenders as upfront cash and Rs 300 crore to fixed deposit holders.
The competition to acquire bankrupt housing finance company DHFL turned more intense on Thursday as the two bidders -- Oaktree Capital and Piramal Group -- revised their offers yet again. While Piramal offered Rs 2,000 crore more, the US-based asset management firm said it would sweeten its offer by Rs 1,700 crore.

The committee of creditors (CoC) will start voting on the proposals this week after its legal team vets them.

A source said Oaktree had increased its bid by Rs 1,700 crore to provide a net present value of total recovery for the lenders at Rs 36,410 crore, which included deferred payments and a "holdback" of Rs 1,500 crore. The holdback is to meet any tax liabilities on the sale of insurance venture of DHFL.

Piramal, however, said it was not only offering more money to the lenders as upfront cash but was also giving Rs 300 crore more to the fixed deposit holders. Piramal's offer of Rs 35,500 crore also includes deferred payments, but with zero holdback.


Both companies are offering upfront money to the lenders from the cash already in the books of DHFL. The deferred payments will be in the form of bonds to be issued by the winner to the banks.

The lenders are getting legal opinion on Oaktree's offer, which has several riders, including a "hold back" of Rs 1,500 crore, which will go to the banks only after the insurance venture is sold and all tax liabilties are met. Besides, the insurance joint venture (JV) of DHFL, in which a foreign entity already holds 49 per cent, is turning out to be a big legal hurdle for Oaktree as well as the lenders, as the acquisition by the US firm would breach the foreign direct investment (FDI) ceiling for the insurance sector. Before Oaktree's offer is put to vote, the administrator of DHFL has to confirm to the CoC that every resolution plan that gets submitted for voting is implementable and not in contravention of any provision of law and the Insolvency and Bankruptcy Code (IBC).

''We are waiting for legal clarifications on this aspect," said a lender.

The third bidder, the Adani group is also in fray but its offer is far below Piramal and Oaktree offers.

Referring to foreign stake in life Insurance venture going beyond regulatory cap of 49 per cent, Oaktree has maintained its resolution offer factors in the legal requirements and will follow norms based on precedents. The company has proposed to park the 51 per cent stake of DHFL in the insurance venture in an alternative investment fund (AIF) in the event the sale process is not concluded by the effective date. Oaktree has offered to arrange a domestic AIF to purchase the stake. It has also mentioned that no separate approval shall be sought from the insurance regulator for this transfer to the AIF, given the AIF would be acting as a temporary or a parking vehicle.

DHFL is undergoing the Corporate Insolvency Resolution Process (CIRP), and is currently being managed by an administrator who is being assisted by an advisory committee in discharging duties, both the advisor and the committee were appointed by the RBI.



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