Piramal Group acquires DHFL for ₹38,000 crores

According to Piramal’s resolution plan, Piramal Capital and Housing Finance Ltd. (PCHFL) will merge with DHFL with Piramal Enterprises Limited having 100 per cent ownership of the merged entity. 

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. 

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