taking longer than anticipated, banks are considering filling the void and helping it restart its business. “Banks will buy stake in DHFL on an as-is-where-is basis,” said a person close to the development. It is also understood that once DHFL finalises its PE investor, banks will exit the company by selling their shares to it.
Timeline of events
DHFL shares crash on concerns of default after IL&FS
Oct: DHFL stops disbursement because of liquidity shortage
Jan 2019: DHFL starts lending again but stops soon
Feb: Promoters of DHFL start talks with lenders
Jun: RBI issues circular on restructuring of stressed debt
Jul: Lenders sign inter-creditor agreement for DHFL resolution
Aug: DHFL presents resolution plan to lenders
“Banks will not have any restriction on the term of holding DHFL’s shares upon converting debt,” said a person with knowledge of the development.
DHFL is believed to be in advanced talked with PE players such as AION Capital and Cerberus Capital. “Investors don’t seem to be keen on putting in money in the wholesale assets of the company and unless they are hived off or sold to another entity, they may not pick up a stake in DHFL,” said a person aware of the development. It is understood that DHFL is in talks with global distress asset buyers such as Oaktree Capital for its wholesale loan book, which totalled roughly Rs 35,000 crore as of March this year. DHFL’s assets stood at Rs 98,000 crore in FY19.
The move is expected to infuse further capital into the company and also cleanse the book significantly.
After the sell-down of the wholesale book, which also carries projects approved by the Slum Rehabilitation Authority (SRA) loan portfolio, DHFL is likely to function as a pure-play retail mortgage lender.
It is understood that banks may finalise on the resolution plan by the end of August, though the long-stop date for the resolution plan is September 25. DHFL will have to execute the plan in 180 days. If it fails, banks will have to mark their exposure to DHFL as non-performing assets (NPAs).
Under the current resolution plan, DHFL has sought fresh loans of Rs 1,200-1,500 crore a month, which will enable it to restart its lending business. The company has also sought for a moratorium of 6-12 months on these fresh loans, apart from seeking an extension of tenure on current loans.