Adani, which earlier bid only for the wholesale and slum redevelopment assets of DHFL, later told lenders that it want to bid for the company’s entire portfolio.

DHFL is currently undergoing insolvency proceedings
Money DHFL Monday, November 16, 2020 - 16:56

After the Adani Group, in a last-minute move, has offered to revise its bid for Dewan Housing Finance Corporation Ltd (DHFL) by bidding for the entire company, Piramal Group, which is one of the bidders has opposed the move and written to the Committee of Creditors threatening to exit the race if Adani’s bid is accepted. Financial services company DHFL is currently undergoing insolvency proceedings with the National Company Law Tribunal under the insolvency and bankruptcy code (IBC) after the Reserve Bank of India superseded its board in November last year replacing it with a 3-member advisory committee.

The company is facing claims to the tune of Rs 87,031 crore from financial creditors. It has total assets worth Rs 93,000 crore, of which the retail assets are valued at Rs 33,000 crore and the wholesale portfolio at Rs 48,000. State Bank of India is the lead banker on the CoC with an exposure of over Rs 10,000 crore to the Mumbai-based company. With the mortgage lender being put on the block, it received four bids - Adani Group, Piramal Enterprises, US-based Oaktree and Hong Kong-based SC Lowy.

Oaktree has bid Rs 31,000 crore for the entire company, while the Piramal group had bid Rs 25,000 crore for the company’s retail portfolio, and Adani bid Rs 2,750 crore for the wholesale and slum redevelopment authority portfolio (Rs 2,700 crore + Rs 50 crore). These are revised bids after the creditors asked the four parties to come up with better offers.  

In its revised bid, Adani has reportedly written to CoC offering to bid for the entire portfolio like Oaktree, has offered Rs 250-300 crore more than what Oaktree bid, and has told the CoC that it will submit the revised resolution plan next week.

This surprise move has angered Piramal group, which has reportedly written to the CoC asking them not to allow Adani to submit a revised bit and has warned that it would exit the race otherwise. It would also undermine the time and effort put in by Piramal and other bidders for submitting a resolution plan, the company reportedly said.

Piramal reportedly said in the letter that the insolvency rules don’t allow a bidder to submit and unsolicited or revised resolution plan post the deadline and said that it has “reasons to believe the details of our resolution plan may have been leaked and have been considered for the purpose of making such an unsolicited offer.”

Interestingly, Oaktree’s bid also has a clause that it can withdraw from the process at any point in time if there are disruptions to the bidding process, or if it finds any further issues in the books of DHFL. This is of significance since an audit by Grant Thornton had found a hole of Rs 14,500 crore in the company’s books. Moreover, the promoters of the company are currently under custody over allegations of fraud and misappropriation of funds.

Business Standard reports that the committee was not particularly satisfied with bids submitted by Piramal and Oaktree, both of which offered a combination of upfront and deferred payments. Bankers, BS reports, prefer a bidder that can pay up upfront. However, no decision has been taken on this yet.