Race for DHFL heats up

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As the race for buying Dewan Housing Finance Corporation Ltd (DHFL) entered the last lap, the Committee of Creditors (CoC) are up against a tricky problem — whether they should give more weightage to the net present value of bids or the upfront cash being offered.

There also seems to be growing concern about additional sweeteners being offered for DHFL as clarifications after the fourth round of bidding.

“This was supposed to be the final round of bids and the commercials were not to be changed, but this does not seem to be the case,” noted a person familiar with the development.

Piramal is understood to be willing to offer more for DHFL’s life insurance subsidiary from its earlier offer of ₹300 crore.

An email query from BusinessLine to Piramal Enterprises on the issue did not elicit a response.

While Oaktree Capital’s bid of about ₹36,700 crore seems to be higher in terms of net present value, Piramal Capital and Housing Finance Ltd (PCHFL) is offering higher upfront cash of ₹13,000 crore.

The Committee of Creditors is expected to meet once more to further discuss the plans and vote on them.

Both Oaktree Capital, which is an US-based alternative investment management firm, and PCHFL, which is a wholly-owned subsidiary of Piramal Enterprises Ltd (PEL), have expressed their concerns to the CoC over the resolution process.

Oaktree Capital wrote to the CoC recently hoping that the resolution process will be completed “positively and in the correct manner”. It noted that the process has been opaque, with shifting parameters and instructions have been unclear.

In a recent letter, US-based firm has also underlined that its bid exceeded the next bid by ₹1,150 crore on a notional basis and ₹1,478 crore on a net present value basis.

“In addition, Oaktree is offering ₹300 crore of incremental value to retail fixed deposit holders in response to various requests received by Oaktree,” the letter pointed out.

Oaktree further said that it has been the subject of a sustained campaign to undermine its bid vis-a-vis three key issues of the conditionality of its bid, the legality of Oaktree as a foreign investor indirectly holding a majority stake in Pramerica Life Insurance Limited, and Oaktree as a foreign investor representing an implementation risk.

Oaktree clarified its position on all three issues to the CoC, stressing that it has presented an unconditional and irrevocable bid, conditional only on NCLT and regulatory approval.

Meanwhile, Ajay Piramal, Chairman, PEL, also wrote a letter to DHFL Administrator R Subramaniakumar emphasising the unconditionality of the bid by PCHFL as well as the fact that it has offered the highest upfront cash.



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