Billionaire Ajay Piramal’s Piramal Capital & Housing Finance Limited emerged as the winning bidder for Dewan Housing Finance Limited (DHFL), with almost 94% creditors voting in its favour on Friday. While the rival Oaktree Capital did not even manage to secure half of the creditor’s votes.
The development also brings some resolution to a key case in India’s insolvency system, where high profile cases have at times lingered on for years. Dewan was put into an insolvency process after it was seized by the central bank in a shock move in late 2019.
The bankruptcy of India’s biggest shadow lenders had also captivated global money managers. More than two dozen firms including Goldman Sachs and Morgan Stanley showed initial bidding interest before the list of potential suitors narrowed.
That bidding contest showed interest in the nation’s soured bank loans, which stood at about 7.7 trillion rupees in the latest data at the end of September. A new wave of investors has bet they can eke out profits from India’s rising number of capital-starved businesses struggling to stay afloat amid the pandemic.
Shadow lenders like Dewan are crucial to India’s economy, lending to small merchants and tycoons alike. The non-bank financing industry fell into crisis in 2018 when financier IL&FS Group suddenly stumbled, and the pandemic has added to strains. Policymakers have stepped in with support, channelling liquidity to the sector last year.