US-based asset management fund Oaktree Capital has become the highest bidder for bankrupt home finance firm DHFL by bidding Rs 36,646 crore for the entire company, which includes deferred payments and Rs 11,646 crore in advance to lenders.
However, the Piramal group offered Rs 13,000 crore in cash up front and the balance of its offering of Rs 35,550 crore in deferred payments for the entire company. The company has also made a second offering only for the retail portfolio at Rs 26,500 crore. The Adani group, however, did not make an aggressive offer in the fourth round and was third in the race.
All offers are made with various conditions and banks must attend all offers evaluating the net present value of each one. Lenders are expected to meet in the third week of December to vote on the two main proposals.
According to the offers, Oaktree will keep the life insurance stake held by DHFL in a trust and once the proceeds from the sale worth Rs 1,000 crore from the sale come after regulatory approval, they will go to the lenders, said a source close to the development. The Piramal group has decided to make the offer with the proceeds from the sale of insurance participation amounting to Rs 200 crore intended for the lenders.
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“There is not much difference between the Piramal and Oaktree offerings as they both include Rs 3,000 crore of earned interest on cash on DHFL’s books,” said a source from the lender. Excluding that, while Piramal’s company-wide bid is Rs 32,350, Oaktree’s bid is Rs 32,646 crore. Banks have a difficult decision to accept both offers. DHFL has Rs 12,000 crore of cash on its books and all advance cash offers are made on the basis of this cash.
The Adani group, however, decided to bid lower than the third round of just Rs 29,860 crore.
SC Lowy, who made a conditional offer of Rs 2.3 billion for the corporate loan portfolio, did not make any offers in the fourth round.
A credit source said they will have to study all offers carefully as Oaktree, which is a foreign company, has made deferred payments. “We have to see what guarantees are on Oaktree’s table, if they decide to leave India tomorrow. In the case of Piramal and Adani, the lenders resort to other measures because they are local companies, ”said the source.
Spokesmen for Piramal and the Adani group did not comment, while Oaktree officials were not available for comment. Interestingly, by making a surprise company-wide offer and upping the ante, the Adani group ensured that Indian lenders get an additional 4.5 billion rupees in the fourth round of offers. Previous round bids from both Piramal and Oaktree were much lower.
With this, the bidding rounds for the DHFL come to an end unless one of the bidders moves the pitch or the former promoter, Kapil Wadhawan, who has already moved off the pitch, gets a pardon.
Indian lenders, mutual funds and provident funds have Rs 90 billion exposure to the company. Of this, State Bank of India has an exposure of Rs 10,000 crore.
Who bid what?
Oak: Rs 36,646 crore with Rs 11,646 crore in advance cash
Piramal: Rs 35,550 crore with Rs 13,000 cr cash up front
Adani: Rs 29,860 cr with Rs 11,000 cr cash up front
DHFL: the story so far
- November 2019: RBI replaced the DHFL Board of Directors and appointed Mr. R. Subramaniakumar as Administrator
- December 2019: NCLT orders bankruptcy proceedings against DHFL after it defaults on bank loans
- January 2020: Lenders invite EoIs for DHFL and / or their books
- February 2020: 24 because it sends EoI for DHFL
- October 2020: Only 4 because they send financial offers
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