Piramal Group completes DHFL acquisition in total consideration of ₹34,250 crore

Piramal Group on Wednesday announced that it has completed the acquisition of housing finance firm Dewan Housing Finance Corporation (DHFL) and a total consideration of ₹34,250 crore has been paid for the same. As a part of the process, Piramal Capital and Housing Finance Ltd (PCHFL) will merge with DHFL.

The group in a statement informed that most of the DHFL creditors are recovering nearly 46% via the resolution. The creditors of DHFL (including FD holders) would recover an aggregate amount of around ₹38,000 crore from the resolution process of DHFL. 

This amount comprises of ₹34,250 crore to be paid by PCHFL as a combination of cash and Non-Convertible Debentures and an amount of around ₹3,800 crore, which is the entitlement of creditors (as per the resolution plan), from the cash balance available with DHFL.

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. The merged entity will be 100% owned by Piramal Enterprises Limited.

There were around 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 at the completion of the acquisition includes an upfront cash component of ₹14,700 crore and issuance of debt instruments of ₹19,550 crores (10-year NCDs at 6.75% p.a. on a half-yearly basis).

The acquisition marks 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, Piramal Group added.

“The acquisition will now provide an India-wide infrastructure with a large branch network as well as a sizable customer base that will leverage the technology-driven multi-product retail lending digital platform,” it said. 

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.