Not enthused by current offers, lenders may seek fresh bids for DHFL

Banks to first ask current bidders to sweeten offers

The lenders to Dewan Housing Finance Corporation (DHFL), which is facing bankruptcy proceedings, are not enthused by the offers made by Oaktree, Piramal Group, Adani Group, and SC Lowy for acquiring the company or its portfolios, and have called the bidders for further negotiations next week.

Unless the bidders sweeten their offers, the lenders will reject them on grounds of their being “too unattractive”, said a source close to the development.

While US-based asset management firm Oaktree has made an offer to take over the entire company for Rs 20,000 crore (including Rs 8,000 crore in deferred payment with interest), Piramal has bid for the retail books for Rs 15,000 crore. 

Adani Group is keen on the construction finance and Slum Redevelopment Area (SRA) books and has offered around Rs 3,000 crore. SC Lowy wants to take over the construction finance books. 

All offers have been made with conditions.

DHFL was sent to the National Company Law Tribunal (NCLT) for debt resolution in December last year after the company failed to repay its debt worth Rs 88,000 crore. 

Apart from the banks, small depositors and provident funds of the Uttar Pradesh government had invested in DHFL’s debt instruments.

According to management consultant EY’s evaluation of all the financial offers, Oaktree has offered the best plan in value, timing and terms, and conditions for the lenders.

“This is not enough, and all bidders have been asked to make presentations from next week,” the source said and added the banks wanted at least half their dues back.

Oaktree and Piramal Group have included the Rs 10,000 crore cash currently in DHFL’s books while making their offers and said part of their own payment would be made over the next seven years, the source said.

Another important view has been expressed by the current management, led by the Reserve Bank of India administrator, who is of the opinion that the bids are too low and the sale process should be deferred till next year, when the economy is expected to improve.

The company is projecting its cash chest to rise to Rs 20,000 crore by the end of next year from Rs 10,000 crore now, which would improve its valuations significantly, the source said.

An email sent to DHFL did not elicit any response.

Just a day after the bidders submitted their offers, former DHFL promoter Kapil Wadhawan, now in judicial custody, wrote to the RBI-appointed administrator and said the assets and the properties of the company would be worth at least Rs 43,000 crore.

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. All backed out barring the four.