Lenders trash low loan recovery, ask Oaktree, Piramal to up offers for DHFL

Few banks may look at acquiring bankrupt housing finance company's retail book.

The lenders to DHFL on Monday asked the four bidders to sweeten their offers for the bankrupt housing finance company after all of them -- Oaktree, Piramal, Adani, and SC Lowy -- made their presentations before them.

Some banks were of the opinion that the lenders should themselves acquire the books of DHFL because the offers were not attractive and all should be rejected.

The Indian lenders, who have an exposure of Rs 88,000 crore to DHFL, are not happy with the offers with most of the bidders adding Rs 12,000 crore -- currently in DHFL’s cash chest -- to their offers.

While Oaktree has made a bid for the entire company, Piramal Group has made an offer for the retail books.

Adani Group bid for the construction finance/SRA (slum redevelopment authority) books. And SC Lowy has made a bid only for the construction finance portfolio.

The bids are offering a very low recovery value -- ranging between as low as Rs 75 crore and the highest bid of only Rs 15,800 crore for various DHFL’s books and the recovery rate will be in the range of 3-16 per cent, said a banking source.

This is in sharp contrast to the 45 per cent recovery of dues seen in the insolvency cases to date.

Oaktree informed the lenders it had bid for the entire company for Rs 15,800 crore -- payable in the next seven years. Oaktree has also offered Rs 12,000 crore available with the company to the lenders. “This would mean banks will recover only 16 per cent of their dues,” said a source close to the development.

Piramal Group has bid for DHFL’s Rs 33,000 crore retail portfolio, offering just Rs 6,000 crore, apart from Rs 9,000 crore of the Rs 12,000 crore available with the company.

Piramal’s offer would result in a recovery of only around 6 per cent for the lenders.

Adani Group has bid for DHFL’s wholesale and Slum Rehabilitation Authority (SRA) asset portfolio for Rs 2,250 crore. Of this, Rs 750 crore will be paid within a year and the balance Rs 1,500 crore after eight years.\

The National Company Law Tribunal , meanwhile, extended the deadline to complete the bankruptcy process by 90 more days -- thus giving more time to the lenders to find a buyer.

The bids for the company were muted also owing to a forensic audit report by Grant Thornton, which revealed a Rs 14,500-crore hole in DHFL’s books. The report, which has been submitted to the National Company Law Tribunal (NCLT), has said there is a Rs 9,320-crore hole in the wholesale books, a Rs 1,707-crore loss on the SRA count, and a diversion of Rs 3,000 crore in retail loans.

Recovering these loans is doubtful, the report said.

In February this year, the lenders to DHFL had sought offers for the company. Almost 24 companies had shown an interest in DHFL. They included Aion Capital, Adani Capital, Hero Fincorp, KKR Credit Advisors, Oaktree, Morgan Stanley, Goldman Sachs Group Inc, Deutsche Bank AG, Warburg Pincus, SSG Capital, Edelweiss, Lone Star, and Blackstone.