MUMBAI: In the first insolvency resolution in the financial services space, Piramal Group has concluded payment of Rs 34,250 crore to take over Dewan Housing and Finance (DHFL). The deal is likely to help banks that had been hit by the company’s collapse.
The payment will bolster the finances of banks that have written off loans to DHFL, whose promoters are accused of fraud. Overall, financial creditors will receive close to Rs 38,000 crore, including the liquid cash with DHFL and Rs 19,550 crore of bonds.
The amount received by creditors will be around 46% of their admitted claims. SBI, Bank of India and Union Bank will be among the beneficiaries. Fixed Deposit holders will, however, get less as they had voted against the resolution plan, which entitles them only to liquidation value. As a result, they get only Rs 1,241 crore, or 23% of their admitted claims of about Rs 5,400 crore.
Piramal Capital and Housing Finance (PCHFL) will merge with DHFL, and the merged entity will be renamed PCHFL.
Piramal Group chairman Ajay Piramal said in the short-term the group would rebalance its loan book to 50-50 between retail and wholesale, but retail would be two-thirds of the book in the medium-term. Currently, it’s dominated by wholesale exposure.
He said the company would offload the wholesale book of DHFL soon. When asked whether the group would continue to look at acquisitions, Piramal said post-integration, the company would have a debt-equity ratio of 3.5:1, giving enough headroom to acquire if an opportunity presented itself.
With this deal, the Ajay Piramal-led group has made a decisive shift in focus to retail lending. The group had earlier brought in Jairam Sridharan, a senior executive from Axis Bank, to grow the retail portfolio. Piramal, who made his fortunes in pharma, changed focus to real estate and diversified into lending. Six years ago, the group had looked at IL&FS before the collapse of the infrastructure and finance group. Piramal Enterprises had also parallelly picked up a stake in Shriram Capital with an eye on synergies but chose to exit when things didn’t work out in 2019.
Going forward, the group would evaluate the insurance business but had no plans to get into asset management, Piramal said. “The acquisition is in line with our road map to transform our financial services business over the last two years. We raised Rs 18,000 crore of equity and strengthened the balance sheet to take advantage of such large opportunities. We have significantly reduced debt-to-equity — creating headroom for significant growth in the merged entity,” said Piramal.
“The combined entity will have 301 branches, 2,338 employees and over 1 million lifetime customers. We have built a technology platform with an advanced analytics engine and AI/ML capabilities, which can be deployed across a larger base of customers,” said Piramal Group executive director Anand Piramal.
Piramal acquires DHFL for Rs 34k cr – Times of India
More from NewsMore posts in News »
- €500 million in private sector investments headed for Ukraine
- RBI asks banks to share information on exposure to Adani Group companies – Business Standard
- NSE puts some Adani firms under watch: What is additional surveillance mechanism (ASM)? – The Indian Express
- Hindenburg bet against India’s Adani puzzles rival U.S. short sellers – Reuters India
- Gautam Adani fails to calm investors as market wipeout hits $100 billion – CNN
More from Real EstateMore posts in Real Estate »
- Market Live Updates: Sensex up 200 points, Nifty flat amid volatility; Adani Group stocks under pressure – Moneycontrol
- Market Live Updates: Sensex falls 380 pts, Nifty below 17,500; Adani Group stocks under pressure – Moneycontrol
- View: How the ‘Madoffs of Manhattan’ can unravel Gautam Adani’s empire – Economic Times
- DLF plans to launch ₹7,500 crore worth premium housing project in Gurugram – BusinessLine
- View: What Adani short seller Hindenburg can learn from Elliott – Economic Times
More from TechnologyMore posts in Technology »
- Closing Bell: Nifty ends flat, Sensex rises 224 pts; FMCG gains, power stocks drag – Moneycontrol
- Market LIVE Updates: Indices trade higher with Nifty around 17,600; ITC top gainer – Moneycontrol
- Buzzing Stocks: Britannia, Coal India, Eicher Motors, others in news today – Moneycontrol
- Wall St rallies as Fed’s Powell nods to easing inflation after rate hike By Reuters – Investing.com
- Tech Mahindra Q3 result: Net profit slips 5% to Rs 1,297 crore; new deal wins at $795 million – Moneycontrol