DHFL | Business Upturn

Yes Bank DHFL Scam: CBI files charge sheet against Pune builder Avinash Bhosale

News Desk — Mon, 25 Jul 2022 18:37:18 +0000

In recent developments from the Yes Bank–DHFL Scam Case, the CBI has filed a Chargesheet against eminent Pune-based builder Avinash Bhosale and his companies. A chargesheet has also been filed against Satyan Gopaldas Tandon, Metropolis Hotels LLP, ABIL Infraprojects Pvt Ltd. As well as ABIL Hospitality Pvt Ltd, Arindam Developers, Avinash Bhosale Group and Flora Developments.

The Central Bureau of Investigation (CBI) has alleged Rs 4,727 crore was misappropriated through various builders, including Bhosale’s companies, in the form of loans and consultancy services. It further said that in addition to the misappropriated amount, Bhosale and his companies also received around Rs 68 crore as consultancy charges for which no consultancy was provided.

Further investigation into the role of others is continuing,” the CBI mentioned in a statement.

The CBI, after arresting Bhosale had said that Yes Bank under Rana Kapoor had disbursed Rs 3,983 crore. To Dewan Housing Finance Ltd(DHFL). Which were proceeds of crime. Out of the said amount, DHFL had sanctioned and disbursed loans aggregating to Rs 2,420 crore. To three group concerns of Radius Group, headed by Sanjay Chhabria. Who was also arrested by the the CBI quite recently. The sanctioned loans were apparently siphoned off and became Non performing assets in the books of DHFL. However, with an outstanding liability of Rs 2,130 crore.

According to the CBI FIR, the scam has started building up between April to June, 2018. Hence, when Yes Bank invested Rs 3,700 crore in short term debentures of scam-hit DHFL.

Piramal Group names Jairam Sridharan as DHFL Managing Director: report

Cheryll Jain — Fri, 08 Oct 2021 08:26:23 +0000

Indian billionaire Ajay Piramal-led Piramal Enterprise has named Jairam Sridharan as the managing director of its newly acquired entity Dewan Housing Finance Corporation Ltd. (DHFL), CNBC-TV 18 reported on Friday, October 8.

This news comes just weeks after the Piramal had successfully completed DHFL’s acquisition on September 29 for a total consideration of Rs. 34,350. As part of the acquisition, DHFL was to merge with Piramal Capital and Housing Finance Ltd. with Piramal Enterprise having 100 per cent ownership of the merged entity.

Currently, Jairam Sridharan is the chief executive officer of Piramal Retail Finance, including the housing finance arm of the Piramal Group. With a career spanning over two decades, he has held a diverse range of domestic and international retail finance roles.

Prior to his position at Piramal Group, he had been in charge of a range of roles at Axis Bank. As the President, Retail Lending & Payments at Axis Bank, he was engaged with propelling growth in the retail lending and payments businesses comprising retail lending products such as home and personal loans, cards business (credit, debit & prepaid) and the agriculture & rural lending business. In his five-year tenure, Axis Bank emerged as one of the top five retail lending institutions in the country.

Before being part of Axis Bank, he was associated with USA-based consumer bank Capital One finance as the Head – ‘New to Credit’ Card Acquisitions in their US Cards Business.

At the origin of his career with ICICI Bank, where he served as Head of the bank’s Business Intelligence Unit, he has been credited with having a crucial role in their initial venture into the retail lending businesses.

Piramal Group acquires DHFL for ₹38,000 crores

Cheryll Jain — Wed, 29 Sep 2021 07:17:06 +0000

The Piramal Group, led by Indian Billionaire Ajay Piramal, has successfully completed the acquisition of Dewan Housing Finance Corporation Ltd. (DHFL) on Wednesday, September 29. As part of the acquisition, the company will be paying a total consideration of Rs. 34,250 crores in cash and securities under the Insolvency and Bankruptcy Code (IBC). The Reserve Bank of India had put DHFL under the bankruptcy process in November 2019.

“We are very pleased to announce the consideration payment made towards the completion of this exciting acquisition. This accelerates our plans to become a leading digitally oriented, diversified financial services conglomerate that focuses on serving the financial needs of the unserved and underserved customers of our country. An important characteristic of any advanced economy is a robust insolvency code. The landmark bankruptcy reforms have made it possible to solve complex resolutions like this in a more complete and timely way,” said Ajay Piramal, Chairman, Piramal Group.

In a statement sent to the exchanges, it was announced that out of Rs. 34,250 crores to be paid by Piramal Capital and Housing Finance Ltd. (PCHFL), Rs 14,700 crores is a cash component while Rs 19,550 crores in the form of non-convertible debentures (10-year NCDs at 6.75% p.a. on a half-yearly basis).

A total of Rs. 3,800 crores will be paid to the creditors out of DHFL’s cash balance, making the total amount recovered by DHFL creditors close to Rs. 38,000 crores. This marks the first and the biggest resolution in value terms in the financial services sector under the Insolvency and Bankruptcy Code.

“There were 70,000 creditors of DHFL and most of them are recovering nearly 46 per cent of their pending dues through the successful completion of the resolution process”, the regulatory filing further added.

According to Piramal’s resolution plan, which received the green light of around 94% of the creditors in a voting process, Piramal Capital and Housing Finance Ltd. (PCHFL) will merge with DHFL with Piramal Enterprises Limited having 100 per cent ownership of the merged entity.

RBI bans DHFL from taking deposits under Primal management

Aryan Jakhar — Tue, 15 Jun 2021 16:39:50 +0000

The Reserve Bank has revoked the deposit-taking status of Dewan Housing Finance (DHFL), the first financial services firm to go for bankruptcy proceedings, and has reclassified it as a non-deposit taking housing finance company, before approving the Piramal group’s bid to take over it towards the end of the resolution process.

The revelation comes in the June 7 NCLT Mumbai order that has approved the Rs 35,250-crore bid for the once second largest mortgage lender by Piramal Capital & Housing Finance, forcing over 65 per cent haircut on the creditors and just Re 1 to its NCD holders to whom it owes more than Rs 45,000-crore.

On the 14th page of the 86-page NCLT order by HP Chaturvedi and Ravikumar Duraisamy, it says DHFL no longer is a deposit-taking NBFC but a non-deposit taking one.

The changes were made in February 2021, after the RBI gave a non-objection to the January 25, 2021 application by R Subramaniakumar, the DHFL administrator, citing Rule 5 of its FSP (financial services providers) Rules.

“Pursuant to the FSP Rules, the RBI communicated its ‘no objection’ on February 16, 2021, for change in control/ownership/management in DHFL in terms of Rule 5(d)(iii) of the FSP Rules and also in terms of para 3 of NHB circular housing finance companies — approval of acquisition or transfer of control Directions, 2016, subject to (inter alia) the condition that the deposit-taking status of DHFL will be revoked and merged entity of DHFL and Piramal

Capital shall function as a non-deposit taking housing finance company,” says the NCLT order. In the concluding part of the order, the bench reiterates that the resolution is subject to the fact that RBI’s non-objection, which is based on the condition that “the status of the corporate debtor (DHFL) is changed from a deposit-taking housing finance company to a non-deposit-taking housing finance company.

It can be noted that DHFL became the first financial services entity to be referred to the NCLT for bankruptcy, when the RBI on November 20, 2019, superseded the DHFL board and appointed Subramaniakumar as its administrator. The company went down after its promoters allegedly siphoned public funds and defaulted on its debt repayments worth over Rs 95,000 crore to 21 banks and tens of thousands of depositors.

More than 55,000 retail and institutional investors hold Rs 5,375 crore worth of fixed deposits in DHFL. The Rs 3,5250-crore bid by the Piramal group was approved by the committee of creditors on January 15, 2021.

The government had to amend the RBI Act and notify a section of the bankruptcy code to enable the RBI to send DHFL to the NCLT under Section 45-IE(2) of the RBI Act which deals with governance concerns and defaults.

Two days superseding its board the RBI on November 22, under Section 45-IE 5(a) of the RBI Act, constituted a three-member advisory committee under Rajiv Lall, non-executive chairman of erstwhile IDFC First Bank, NS Kannan, managing director of ICICI Prudential Life, and NS Venkatesh, chief executive of the Mutual fund lobby Amfi to advise the administrator in the operations of DHFL during the resolution process.

The NCLT admitted the case on December 3, 2019, and cleared the process on June 7, 2021, as the whole process got delayed by the pandemic driven lockdowns.

However, the DHFL case scored some unusual headlines when the Mumbai NCLT bench headed HP Chaturvedi and Ravikumar Duraisamy on May 26, 2021, had asked the committee of creditors to relook at the ready offer of over Rs 92,000 crore offer made by the Wadhawans, the original promoters of DHFL.

The order was stayed by appellate body NCLAT the very next day and on June 7, the final order approving the Piramal group bid, which is only a third of its dues, was issued.

The Mumbai bench of NCLT directs the lenders of DHFL to now consider its former promoter Wadhwan’s settlement offer

Meemansa Shekhawat — Wed, 19 May 2021 12:37:18 +0000

The Mumbai bench of the National Company Law Tribunal (NCLT) has asked the lenders of Dewan House Finance Limited (DHFL) to now ponder over its former promoter Kapil Wadhwan’s settlement offer for the bankrupt or insolvent firm.

Well, the creditors’ committee has been provided ten days time to consider Wadhman’s offer and revert back to the court with their final decision till May 31st, according to the sources.

Though the court has pronounced a verbal order as of now and the written copy is yet to be published.

In addition to this, the RBI-appointed administrator of the company has filed another fraud claim against DHFL promoters and the same tribunal has taken up the case.

RBI approves Piramal Enterprises’ takeover of DHFL

Arnav Dogra — Thu, 18 Feb 2021 10:16:44 +0000

According to anonymous sources, the Reserve Bank of India (RBI) has given approval to billionaire Ajay Piramal’s Piramal Group for the takeover of the bankrupt Home Loan firm Dewan Housing Finance Corporation (DHFL), Moneycontrol reported.

DHFL is now working on a proposal which will be taken to the National Company Law Tribunal (NCLT) in a few days where the legalities of the acquisition will be worked upon.

This update has come only a month after the Piramal Group won the auction to take over Dewan Housing in which it was contending against Oaktree, an American asset management company. Although Oaktree’s bid was the highest at Rs 35,700 crore compares to Piramal’s, which was at ₹32,250 crore, Piramal bagged the deal since it was offering higher upfront payment to creditors and equity infusion into DHFL.

The board of DHFL, in a meeting on January 15, voted in favour of Piramal for the takeover. Piramal Enterprises was able to get more than 94% votes, while Oaktree was lagging far behind at 45% votes, followed by another bidder, Adani Capital, at 18% votes.

DHFL had declared bankruptcy in 2018, when its losses reached record high due to the then-ongoing liquidity crunch in the Infrastructure Leasing & Financial Services (IL&FS) sector.

RBI’s discussion paper proposes strict regulations for large NBFCs

Sarthak Yadav — Fri, 22 Jan 2021 12:11:27 +0000

A discussion paper on regulation of non-banking finance companies (NBFCs) by Reserve Bank Of India (RBI) has set tighter regulations for large NBFCs and proposed a multilayer model in the industry.

The multiple layer structure will categorise NBFCs depending on their size and interconnectedness with the system. NBFCs in the lower layer will be known as NBFC-Base Layer (NBFC-BL). NBFCs in the middle layer will be known as NBFC-Middle Layer (NBFC-ML) and NBFC in the Upper Layer will be known as NBFC-Upper Layer (NBFC-UL), the RBI said.

Further, the central bank has called for feedback on this discussion paper.

The step is taken to tighten regulations and to safeguard the financial system considering the growing size of certain companies and their link to the rest of the system.

“In view of the recent stress in the sector, it has become imperative to reexamine the suitability of this regulatory approach, especially when failure of an extremely large NBFC can precipitate systemic risks,” the RBI said.

As reported by Moneycontrol, RBI said, “In the last few years there have been some major NBFC failures such as IL&FS and DHFL .”

According to the RBI discussion paper, the process of identification of NBFC-UL based on parametric analysis discussed above shall be conducted as a yearly exercise. Once identified as NBFC-UL, the NBFC will be advised individually about its classification as a NBFC-UL and that it will be subjected to regulation akin to banks, the RBI said.

A time-period of eight weeks will be provided to the NBFC to enable it to chart out a plan for implementation. Within the allotted time period, the RBI said. The methodology for assessing the NBFC-UL will be reviewed on a regular basis, which is at least once in four years, the RBI said.

NBFCs in the upper layer will have to comply with common equity Tier 1 capital regulations like commercial banks. They need to maintain a 9% CET1 ratio, the RBI said.

“It is felt that CET 1 could be introduced for NBFC-UL to enhance the quality of regulatory capital. It is proposed that CET 1 may be prescribed at 9% within the Tier I capital,” RBI added.

NBFCs will also have to comply with the 90-day NPA classification rule such as banks. The RBI discussion paper has also proposed to increase the minimum capital norms from Rs2 crore to RS 20 crore for NBFCs. Also, the threshold to identify systemically important NBFCs has been raised to Rs 1,000 crore from Rs 500 crore.

Piramal Group to take charge of DHFL

Ruchira Sonawat — Mon, 18 Jan 2021 06:46:55 +0000

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.

Piramal voted as preferred bidder for DHFL, most contested bankruptcy bid

Sanah Shah — Fri, 15 Jan 2021 16:20:14 +0000

For the beleaguered mortgage lender, Dewan Housing Finance Corporation (DHFL), Piramal Group has appeared as a preferred bidder at the end of voting by the Committee of Creditors (CoC) as on 15th January 2021. The bid received almost 94% votes in favour of Ajay Piramal, Chairman Piramal Group, followed by Oaktree at 45%. Adani Capital captured 18%.

The bidding war has been going on since months with Piramal Group and Oaktree Capital being at the head of the race in the final round. Piramal Enterprises is an Indian expanded conglomerate, whereas, Oaktree is an American asset management company. They both made bids in the range of Rs 37,000 – 38,000 crore. The cash components have been almost identical, at approximately Rs 17,000 crore each.

Throughout the entire process of bidding, the Piramals maintained their stance that the bid had an upper hand over Oaktree due to various reasons.

Apart from the financial part, creditors evaluated the non-financial aspect such as regulatory compliance, company track records and future action plan and so on. This was said by officials who are aware of the matter.

Moneycontrol earlier reported that Piramal appears to have a clear edge over Oaktree.

DHFL broke under the weight of an extreme liquidity crunch after the collapse of Infrastructure Leasing & Financial Services (IL&FS) in late 2018. They consequently couldn’t recover from the low point and became bankrupt.

Lamenting further, investigations were launched against the Wadhawans on different charges related to financial irregularities and shocking nexus with the underworld regarding particular real estate transactions. DHFL was pushed to the National Company Law Tribunal (NCLT) in December 2019. After that, the creditors to the company have attempted for a resolution.

DHFL is obliged to pay around Rs 91,000 crore to its creditors. State Bank of India is the biggest creditor with an exposure of Rs 10,000 crore. Some other lenders include Bank of India, Canara Bank, NHB, Union Bank of India, Syndicate Bank, and Bank of Baroda.

DHFL Auction: Piramal Enterprises takes edge over Oaktree

Divya Joyce — Wed, 16 Dec 2020 11:11:21 +0000

Even as Oaktree emerged as the highest bidder for Diwan Housing Finance Ltd (DHFL) in terms of value, Piramal Enterprises has edged out rival suitor Oaktree Capital in the auction to purchase the assets of Diwan Housing Finance Ltd (DHFL) as Piramal offers at least Rs 1,000 crore higher upfront payment than US asset manager Oaktree for DHFL in the fourth round of auction.

Piramal Enterprises, a diversified conglomerate, offered Rs 12,700 crore as cash upfront trumping the Rs 11,646 crore offer from American asset manager Oaktree. Piramal and Oaktree trumped Adani Properties, the remaining suitor in the fray, in the fourth round of bids on Monday.

Oaktree Capital has offered Rs 36,646 crore for the entire DHFL business compared with Piramal’s Rs 35,550-crore bid. But Piramal holds the advantage in the auction due to two vital factors, according to the people cited above.

The Deal

One, lenders led by State Bank of India prefer the higher upfront to the extent of over 1,000 crore by Piramal. “As part of the request for resolution plans (RFRP), the committee of creditors (COC) has shared a (purely objective) scoring grid. This is a weighted average of the upfront cash amount and the net present value (a measure of an enterprise’s profitability) offered by each bidder. Piramal bid scores highest on this quantitative score,” said a person with direct knowledge of the auction.

The CoC, which is due to meet on Friday to evaluate the bids, is likely to favour the upfront cash component because the Insolvency and Bankruptcy Code (IBC) emphasizes the principle of maximization of value, said this person.

Two, Oaktree’s proposed takeover of DHFL’s insurance business—DHFL Pramerica Life Insurance— is complicated because it is a foreign entity, potentially inviting the gaze of insurance regulator IRDAI. Oaktree Capital would have to contend with 49 percent FDI insurance restriction in the takeover of the insurance unit because 49 percent of DHFL Pramerica Life Insurance is already owned as foreign investment by Prudential International Insurance Holdings Ltd.

Insurance Companies (Foreign Investment) Rules, 2015 issued by the IRDAI require Indian insurance companies to be owned and controlled by Indian residents and/or citizens at all times. In other words, no foreign entity can own the DHFL stake in DHFL Pramerica Life Insurance.

Under these circumstances, Oaktree’s resolution plan cannot be implemented until the matter of foreign ownership in DHFL Pramerica Life Insurance Ltd is resolved. In a nutshell, the implementation of the Oaktree plan is conditional on such a sale. IRDAI officials have already communicated the above position to the COC, said another person familiar with the matter.

Piramal as an Indian entity has no such problems. Its bid offers a clean solution whereby either the entity can be sold by lenders through an open process, and in cases, it fails, can be bought by Piramal for a pre-specified sum.

No foreign bidder can offer this certainty. And any potential structure (say, an intermediary fund) would need explicit IRDAI approval.

Additionally, Oaktree’s plan proposes a holdback component of Rs 1,500 crore to meet contingencies arising on account of investment in DHFL Pramerica Life Insurance Ltd. This holdback is proposed to be carved out from the amount belonging to financial creditors and is allegedly in gross violation of the RFRP (request for resolution plans), according to another person cited above.

“Further since the holdback is for an indefinite period, the same should not be considered for the NPV (net present value) calculations and should be ideally excluded from the upfront cash payment,” this person added. To be sure, the NPV, equity participation and upfront cash component are part of the scoring criteria of the CoC.
Piramal also has other factors working in its favour in the bid for DHFL.
The Indian company’s bid is unconditional, and does not have built-in options for revoking the bid, or revoking pricing at a later date etc, said another person familiar with the company’s plans for DHFL.

The Piramal bid purposes to merge its financial services business into DHFL, he said. “This makes available over Rs 10,000 crore of equity for growing and investing in this business. Compared to this, the competing bid offers Rs 1 lakh.”

The Oaktree bid asks lenders to keep aside Rs 1,500 crore of its own money in an escrow, to cover for any potential outflow that might arise for them related to the insurance business. “In effect, this is a reduction in the actual upfront cash they are bringing in. If this is removed from their bid, the Piramal bid has a higher NPV as well, this being superior on all dimensions,” the person cited above said.

This person said Piramal bid for DHFL on a going concern basis, intending to invest in and grow the business. The bid promises that the employment of staff will be protected, and the business grew. It is not a bid that loads a lot of debt on the entity, strips out assets, and creates financial returns for distressed sector investors, according to him.

If the plan is not approved and/or implemented by March 31, 2021, and if there is any deterioration in the assets of DHFL, Oaktree has reserved the right to discuss re-pricing of the commercial terms of its resolution plan with the COC.

Loose-ends

That’s not all. The Piramal bid specifically takes care of retail FD holders. What this means is that once the COC members decide on the allocation of the total consideration they receive from the auction, whatever they allocate to FD holders, Piramal has committed to top up another 10 percent on top of that, out of their own pocket (over and above the total bid amount). In contrast, Oaktree has not specifically kept aside money for FD holders.

“As a domestic suitor, Piramal group may have a smoother path to acquire the DHFL business. Their offer seeks only mandatory regulatory approvals from the CCI, NCLT and RBI and is otherwise unconditional. Significantly, the plan also mentions that in case DHFL Investment Ltd’s shareholding in DHFL Pramerica Life Insurance Ltd cannot be divested, the Piramal group is ready to buy it from them for around 300 crore,” said a fourth person cited above.

DHFL bid: Oaktree Cap emerges as the highest bidder with Rs 32,700 crore

Shalmali Bhagwat — Tue, 15 Dec 2020 06:47:32 +0000

As reported by Mint, global alternative asset investor Oaktree Capital Management has stepped in the spotlight as the highest bidder for bankrupt Dewan Housing Finance Corp. Ltd (DHFL), overtaking Adani Enterprises Ltd and Piramal Group, two people aware of the matter said. Oaktree Capital offered to pay Rs 32,700 crore in the fourth round of bidding for mortgage lender DHFL’s entire portfolio, followed by Piramal with Rs 32,350 crore and Adani Enterprises with Rs 29,860 crore, the people cited above said on condition of anonymity.

The revised bids were asked for after the Adani group made an unsolicited offer to buy the entire company instead of the select assets it had bid for earlier. S.C. Lowy, which had earlier bid for DHFL’s assets, did not revise with the submission of a fresh bid. The Adani group also made a separate offer to purchase the wholesale and slum rehabilitation projects controlled by DHFL. Piramal, too, submitted a separate bid for DHFL’s retail assets.

Meanwhile, former DHFL promoter Kapil Wadhawan on Monday has renewed the previous offer for the company. In a letter addressed to the DHFL administrator, Wadhawan said he could fully repay all creditors in 7-8 years, with an upfront payment of Rs 9,000 crore. “If the bids received for Dewan Housing Finance Corp continue to be as low as they were previously, I would request the committee of creditors to consider my settlement proposal instead, rather than permit Dewan Housing Finance Corp to be sold for a song,” he said.

Under his proposal, settlements will commence from the fiscal year 2022 and will guarantee the completion of stalled projects to recover dues in the wholesale business. Later, the company will focus on fresh retail loans, the letter said.

Dewan Housing’s outstanding loan book is valued at ₹67,000 crore, which includes wholesale loans worth ₹40,000 crore, retail loans worth ₹17,000 crore and delinquent loans worth ₹10,000 crore. The company went into administration in November last year, after the Reserve Bank of India instructed lenders to initiate proceedings.

DHFL put for bid for fourth time, Piramal marked as highest bidder

Akanksha Yadav — Mon, 14 Dec 2020 11:33:34 +0000

Talks have it that Piramal Group has offered bid worth Rs 35000 crores to buy Dewan Housing Finance Corporation and it is said to be the highest bid offered. Previously, Piramal had offered bids only for its retail assets.

Matter experts said that Piramal’s bid ranks higher than the bids offered by Adani and Oaktree.

Adani had offered a bid worth Rs 33,000 crore whereas Oaktree raised its offer by about 10 percent and bid Rs 34,000 crore, making Piramal, possibly the successful bidder if the lenders are to abide by the principle of recovery maximisation which forced them to call for bids for the fourth time.

S C Lowly backed out from buying DHFL since the creditors kept changing the sale process structure to maximise the recovery for them. If Piramal successfully achieves the company, it can become Mumbai Real estate market’s most dominant player.

“As indicated earlier, Piramal separately put up bids for retail assets while Adani expressed interest for wholesale and slum rehabilitation project loans,” a senior executive, whose organization lent to the home financier, told Economic Times.

“Separate revised bids to own retail and institutional assets are little different from earlier offers,” sources added.

Dewan Housing Finance’s administrator has already sent out formal letters to the four existing bidders of the troubled mortgage financier, asking them to send in revised purchase offers for the fourth time. Potential buyers are required to respond by December 14.

DHFL Bid: Adani likely to step up ₹33,000 crore

Shalmali Bhagwat — Mon, 30 Nov 2020 05:48:21 +0000

Billionaire Gautam Adani’s Group has reportedly signalled that it can step further upon its ₹33,000 crore takeover offer for collapsed housing lender Dewan Housing Finance Corp. Ltd (DHFL) and has sought seizure of deposits of bidders seeking to impair the proceedings of the auction by questioning maximum recovery of public money.

The initial bid by Adani group was only for DHFL’s wholesale and Slum Rehabilitation Authority (SRA) portfolio, in the revised offer submitted on 17 November the bid was made for the entire book, quoting a figure of ₹30,000 crore plus interest of ₹3,000 crore, an official in lenders consortia said. This was ₹28,300 crore higher up the scale than the offer made by Oaktree, the official said adding the firm’s conditional bid had specified that it would hold back ₹1,000 crore on insurance claims. Piramal quoted ₹23,500 crore only for the retail portfolio of DHFL while Hong Kong-based SC Lowy bid ₹2,350 crore for SRA.

This was followed by rival bidders raising questions over Adani’s bid, saying the group had submitted the bid past the deadline and that it was not fair to seek expansion on its original plan. All the three rival bidders sought disqualification of Adani, the official said.

In the 22 November email, the Adani Group said it that the October bid was made focussing primarily on wholesale and SRA assets as it was hopeful that along with the Piramal Group, it would crack the deal (Piramal bid only for retail assets). But on the opening of bids on 9 November, Adani saw that bids put in by rivals did not reflect the value of the company and decided to bid for the entire book. Adani has said it has followed the pre-designed process and “no resolution applicant has any right to object”. Also, the Committee of Creditors (CoC) and the Administrator are duty-bound to take steps which result in value maximization.

The bid process rests power with the administrator/CoC “forfeiting the earnest money of such a resolution applicant” who has “directly or indirectly engaged in coercive practice and/or restrictive practice”. “We reiterate our intent has always been to provide an unconditional offer and potential value maximization for all the stakeholders and at the same time ensuring an expeditious consummation of the process,” Adani wrote. “We also stand committed to further improve our offer when revised offers are invited.”

A person involved in the proceedings said it appears the Administrator was not likely to entertain the Adani offer even though it appeared to be the highest bid.

DHFL Bid: Adani claims rivals are preventing value maximization of assets

Divya Joyce — Fri, 27 Nov 2020 09:04:43 +0000

Adani Group has written “rival bidders are preventing value maximization and their deposits should be forfeited for doing so” to the administrator of Dewan Housing Finance Corporation Limited (DHFL). It also termed these rivals a “cartel” for trying to “restrict full and fair competition,” the report said.

The group in the letter acknowledged that its initial expression of interest (EoI) was for DHFL’s wholesale and slum redevelopment authority (SRA) assets only, and they expected to complete the deal with Piramal Enterprises – which only bid for the retail assets, a source told.

However, when bids were opened it “realized rivals had made bids that did not reflect the value of the company” and hence put an offer for the entire company. Other bidders Piramal, Oaktree (US) and SC Lowy (Hong Kong) had complained against Adani’s changed bid.

Adani, in turn, pointed out an “important flaw” stating the administrator put conditions on their offer while inviting fresh bids on November 17, despite the bidding document allowing applicants to revise their offer – thus their bid was in accordance with the processes.

“The committee of creditors (CoC) and administrator are duty-bound to take steps that resulted in value maximization for all stakeholders,” the letter said.

Adani further noted that it had improved its unconditional offer in the final bid including Rs 11,000 crore upfront cash and Rs 19,000 crore payment to lenders with interest; and expressed willingness to “further improve” when revised bids are called.

Reports on November 17 said that Piramal Enterprises asked the CoC to reject Adani Properties’ proposal to bid for DHFL’s entire portfolio or it would withdraw from the process. In a letter written to the RBI-appointed administrator on November 13, Piramal Enterprises strongly protested the move, calling Adani’s proposal to change its bid after the deadline disruptive and vitiated.

Promoters hold about 39.21 percent stake in DHFL. Bankers want promoters’ stake to fall below 10 percent after the stake sale as part of the resolution plan. The CoC was hoping to finalize the resolution plan by November 16 before it could send it to the RBI for review. Last month, the National Company Law Tribunal (NCLT) had allowed 90 days extension for the resolution process till January 5.

DHFL reports net loss of ₹2,122.65 crore

Shalmali Bhagwat — Thu, 26 Nov 2020 14:14:08 +0000

Dewan Housing Finance Corporation Ltd (DHFL) has made public that it suffered from a consolidated net loss of ₹2,122.65 crore in the second quarter of the fiscal against a net loss of ₹6,640.62 crore in the same period a year ago. For the quarter concluded on September 30, 2020, DHFL reported a total income of ₹2,205.90 crore compared to ₹2,581.16 crore in the same period last fiscal. Its revenue from operations jumped up by 4.65 per cent to ₹2,204.81 crore from ₹2,106.71 crore.

Dewan Housing Finance Corporation Ltd is a deposit-taking housing finance company, based in Mumbai with branches in major cities across India. DHFL was established to offer access to economical housing finance to the lower and middle-income groups in semi-urban and rural parts of India.

“The company also reported transaction details to Stock Exchanges and NHB through communications dated September 2, 2020, September 28, 2020, and October 6, 2020, for an outstanding sum of ₹14,04,550 lakh, ₹12,70,553 lakh and ₹1,86,484 lakh, respectively. The company has made provisions as per NHB guidelines on ‘Provisioning Pertaining to Fraud Accounts’,” DHFL Administrator R Subramaniakumar said in the results.

The auditors said DHFL’s continuance as a growing concern depends upon the result of the ongoing corporate insolvency resolution process. “The group has accumulated losses exceeding the share capital and reserves and its net worth is fully eroded,” it noted. DHFL shares soared by over five per cent in intra-day trade and closed at a gain of 4.88 per cent at ₹25.8 apiece on BSE on Thursday.

SBI appeals suitors of DHFL to raise offers

Shalmali Bhagwat — Fri, 20 Nov 2020 08:02:23 +0000

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.

Adani Properties bids for entire book of DHFL at the eleventh hour: Sources

Sarthak Yadav — Mon, 16 Nov 2020 08:07:05 +0000

Adani is now open to bidding for the entire DHFL company. Earlier, they had only bid for the wholesale book and slum rehabilitation book of DHFL. Adani Properties has informed the RBI Administrator and Committee of Creditors (CoC) of Dewan Housing Finance Limited (DHFL) that they have bid for the whole book and have offered Rs 250-300 crore more than US-based Oaktree Capital’s Rs 31,000 crore, according to sources.

Bidding option allowed at this point in time is still under discussion among the bankers and they have not responded to the offer made by Adani Properties yet. Adani Properties has currently revised it’s bid to Rs 2,700 crore from Rs 2,200 crore earlier for the wholesale book.

In the bids submitted earlier, Oaktree had bid Rs 31,000 crore for the entire company whereas Piramal had bid Rs 25,000 crore for the retail books of DHFL. Adani had bid around Rs 3,000 crore for the book of the wholesale/slum redevelopment authority then.

Earlier, the Piramal Group requested the committee of creditors to disregard Adani Group’s new offer. It hinted on exiting if Adani wins the DHFL bid.

Piramal to exit if Adani Group wins DHFL bid

Akanksha Yadav — Mon, 16 Nov 2020 05:07:48 +0000

Adani Group’s last-minute surprise bid during the Diwali weekend for DHFL’s entire assets has upset the Piramal group, which has threatened to exit the race altogether if Adani Group’s bid is accepted. Adani has pipped Oaktree and Piramal by bidding higher than them, as earlier, they had bid only for the wholesale book.

The Piramal Group, who have been caught off guard by the development, has requested the committee of creditors to disregard Adani Group’s new offer and has threatened to seek legal redressal if that is not done.

Bankers have stated that they are not excited by the offers of Piramal and Oaktree and would prefer a bidder who puts up more money into it. Besides, the offer put forward by Oaktree that it is liable to withdraw from the process anytime if it finds any loopholes in the books has kept the bankers worried.

“Oaktree was offering only around Rs 1,000 crore upfront fromits pocket while the rest was DHFL’s cash, to be given after a few years. The banks would prefer a buyer who can offer a higher cash component now,” a banker acquainted with the developments stated.

PNB declares exposure to DHFL as fraud in acquisition

Chittesh Dalmia — Fri, 10 Jul 2020 06:12:34 +0000

PNB declares exposure to DHFL as fraud in acquisition. India’s second-largest public sector bank Punjab National Bank (PNB). Furthermore, after SBI on Thursday declared its ₹3,688.58 Crores exposure. To mortgage financier Dewan Housing Finance Ltd (DHFL) as a fraud.

“A fraud of Rs 3688.58 Crores in the NPA account of Dewan Housing Finance (DHFL). Which is at Large Corporate Branch at Mumbai, Zonal Office, Mumbai. A fraud of Rs 3688.58 crore is being reported by the bank to RBI. In the accounts of the company (DHFL)”. It said in an exchange filing. Bank has already made provisions amounting to ₹1,246.58 crore, as per prescribed prudential norms.

Once an account is declared fraud, banks need to set aside 100% of the outstanding loans as provisions, either in one go or over four quarters, according to RBI rules.

Earlier this year, the National Financial Reporting Authority (NFRA) had started an audit. But of DHFL accounts and has reached out to its administrator for documents pertaining to the company’s statutory audit for 2017-18. However, On 12 February, the report was presented to the administrator, who believes certain transactions were related to undervalued transactions, extortionate (on unfair terms) transactions and fraudulent trading, under the Insolvency and Bankruptcy Code (IBC).

Also, On 20 November, the RBI had superseded DHFL’s board. And later referred the mortgage lender to the National Company Law Tribunal (NCLT).

On July 10 9:31 am, the bank’s stock was trading at Rs 35.45, down Rs 1.65, or 4.45 percent. The 52-week high is Rs. 76.15.

With the increasing threat of COVID19, precaution is the only cure. Maintain social distancing and travel in your own vehicle. Apply for a #PNB Car Loan today and enjoy a safe journey. Know more: https://t.co/7qiKDGQOv4 #PNBCarLoan pic.twitter.com/stAqKuZywf

— Punjab National Bank (@pnbindia) July 10, 2020