SBI (State Bank of India), the lead lender of Dewan Housing Finance Corp Limited (DHFL) appealed to fellow lenders, to convince all four suitors to the bankrupt home financer to upgrade their offers. This comes in light due to an improvement in the asset quality of the mortgage lender.
SBI conveyed its decision in a meeting on Tuesday to evaluate the revised bids received from Oaktree Capital Management, Piramal Enterprises Limited, Adani Enterprises Limited, and SC Lowy, the people aware of development disclosed on the condition of anonymity.
The easing of the lockdown has fostered rapid improvement in the asset quality of DHFL, with many borrowers, including home buyers and property developers, slowly commencing the repayment of their loans. This has boosted cash flows of the struggling lender, prompting SBI to seek significantly higher bids from the four companies.
SBI’s move also follows the move of the former promoter of DHFL, Kapil Wadhawan, writing letters to the committee of creditors (CoC), the Reserve Bank of India (RBI) and the Prime Minister’s Office to express his displeasure about the bidding process, alleging that the valuation of the property financier was much lower than its fair value. In the letters, Wadhwan has written that the value of the underlying assets of DHFL would amount at least ₹43,000 crore and the bids received so far were less than the intrinsic value of the company, which has displayed recovery since it was referred to bankruptcy. DHFL is liable for payment of ₹87,000 crore to lenders and bondholders together.
So far, Piramal has offered ₹26,000 crore for DHFL’s retail loan book while Oaktree has bid ₹31,000 crore for the entire company. Adani had first bid around ₹2,700 crore for the wholesale/slum redevelopment authority loan book. Soon after Adani’s revised offer, Piramal wrote to creditors of DHFL threatening to take legal action if Adani’s bid was accepted, which it said was made after the closure of the formal deadline.