The creditors of DHFL (including FD holders) would recover an aggregate amount of approximately Rs 38,000 crore from the resolution process of DHFL.
The Piramal Group has concluded the acquisition of Dewan Housing Finance Corporation (DHFL) under the Insolvency and Bankruptcy Code (IBC). This is the first successful resolution under the IBC route in the financial services sector. In value terms, the transaction is among the largest resolutions till date.
In January 2021, 94% of the Creditors of DHFL voted in favor of Piramal's resolution plan. Approvals were also obtained from the RBI, CCI and NCLT for the completion of this transaction. As a part of the process, Piramal Capital and Housing Finance (PCHFL) will merge with DHFL. The merged entity will be 100% owned by Piramal Enterprises.
The creditors of DHFL (including FD holders) would recover an aggregate amount of approximately Rs 38,000 crore from the resolution process of DHFL. This amount comprises of approximately Rs 34,250 crore to be paid by PCHFL as a combination of cash and non-convertible debentures and an amount of approximately Rs 3,800 crore, which is the entitlement of creditors (as per the resolution plan), from the cash balance available with DHFL.
There were approximately 70,000 creditors of DHFL and most of them are recovering nearly 46% of their pending dues through the successful completion of resolution process.
The total consideration paid by the Piramal Group of approximately Rs 34,250 crore at the completion of the acquisition, includes an upfront cash component of approximately Rs 14,700 crore and issuance of debt instruments of approximately Rs 19,550 crore (10-year NCDs at 6.75% p.a. on a half-yearly basis).
The merged entity combines Piramal's financial strength, core values and institutional credibility with DHFL's geographic footprint and distribution network of 301 branches and 2,338 employees catering to approximately 1 million lifetime customers across 24 states - making it one of the leading housing finance companies in the country.
It creates an India-wide platform focused on the affordable segment (with average loan ticket size of nearly Rs 17 lakhs) to address the diverse financing needs of the under-served and unserved 'Bharat' market - that represents Indian budget conscious customers at the periphery of metros and in Tier I, II and III cities.
The acquisition will now provide an India-wide infrastructure with a large branch network as well as a sizable customer base. It enables the company to significantly grow and diversify the retail loan book through product innovation, customised offering and superior customer experience.
The company will offer services such as used cars and two-wheeler loans; education loans for vocational and online courses; small builder finance to meet construction finance requirement; unsecured business loans; personal loans and loan against securities
Ajay Piramal, chairman, Piramal Group said, "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."
Piramal Enterprises (PEL) is diversified across pharmaceuticals and financial services business. Piramal Pharma (PPL), a 80% subsidiary of PEL, offers a portfolio of differentiated products and services through end-to-end manufacturing capabilities across 14 global facilities and a global distribution network in over 100 countries. Piramal Capital and Housing Finance, 100% subsidiary of PEL, is registered as a housing finance company with the National Housing Bank (NHB) and is involved in various financial services businesses.
PEL's consolidated net profit rose 8.85% to Rs 539.40 crore as net sales remained flat at Rs 2,908.68 crore in Q1 FY22 over Q1 FY21.
The scrip fell 1.36% to currently trade at Rs 2643.70 on the BSE.
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