DHFL has been acquired by Piramal Enterprises Ltd for total consideration of ₹34,250 crore
Piramal Enterprises Ltd (PEL) on Wednesday said it has formally acquired the bankrupt Dewan Housing Finance Corporation Ltd (DHFL) by making the cash payment of ₹14,700 crore to creditors as per the resolution plan.
DHFL has been acquired by Piramal for total consideration of ₹34,250 crore which includes an upfront cash component of ₹14,700 crore paid on Wednesday and issuance of debt instruments of ₹19,550 crore (10-year NCDs at 6.75% p.a. on a half-yearly basis).
Besides this the creditor have got ₹3,800 crore in cash that was with DHFL when the administrator took over the entity for debt resolution.
Addressing a press conference virtually Ajay Piramal, chairman, Piramal Group said this was 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, setting the precedent for future resolutions in the sector,” he 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,” he added.
Mr. Piramal said 94% of the creditors had voted in favour of their resolution plan. He said all necessary approvals have been obtained from Reserve Bank of India (RBI), Competition Commission of India (CCI) and National Company Law Tribunal (NCLT).
He said Piramal Capital and Housing Finance Ltd. (PCHFL) will merge with DHFL and the merged entity will be named as PCHFL. The merger will be effected within two weeks. The merged entity will be 100% owned by Piramal Enterprises.
Mr Piramal said most of the DHFL creditors have recovered nearly 46% through successful completion of the resolution process and the merger creates one of the leading Housing Finance Companies in India, focused on affordable financing.
With access to over 1 million lifetime customers it will have presence across 24 states with a network of 301 branches and 2,338 employees. The plan is to add another 1,000 employees in near term and take the branch network to 1,000 in five years.
He said the acquisition will scale up Piramal’s retail loan book to 5 times and this was in line with a strategic roadmap to transform Piramal’s financial services business, over the last two years.
The company has raised ₹18,000 crore of equity and strengthened the balance sheet to take advantage of such large opportunities.
He said the merged entity will have significantly reduced debt-to-equity thus creating headroom for significant growth in the future.
In January 2021 creditors of DHFL voted in favor of Piramal’s resolution plan.
The creditors including FD holders would recover an aggregate amount of Rs.38,000 crore from the resolution process of DHFL.
There were 70,000 creditors of DHFL.