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Oaktree Capital, Piramal Enterprise trump Adani Properties with new DHFL bids

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Mumbai: It’s a toss-up between Oaktree Capital and Piramal Enterprises after they trumped Adani Properties in the fourth round of bids submitted on Monday for the troubled mortgage lender Dewan Housing Finance Corporation (DHFL).

Multiple people involved in the discussions said that Oaktree’s ₹36,646-crore offer has the quickest repayment timelines and a higher overall recovery but the equity infusion is only about ₹1,500 crore.

Piramal Group has offered to make the highest cash payment upfront of ₹12,700 crore to DHFL creditors and a higher equity contribution of ₹2,500 crore. The group has also reiterated its offer to merge its flagship finance firm Piramal Capital and Housing Finance with DHFL, thereby swelling the combined entity’s net worth to more than ₹18,000 crore and cushioning its ability to issue debt. Piramal’s bid comprises deferred payment of ₹19,550 crore payable but it is payable over a longer tenure of 10 years in the form of bonds. Its earlier bid was only for the retail book.

The NYSE-listed asset management firm Oaktree, in comparison, has offered a higher deferred payment of ₹21,000 crore worth of bonds over 7 years and an upfront payout of ₹11,646 crore.

Adani, which had emerged as the highest bidder after a late, unsolicited bid after round-3, has offered ₹10,750 crore upfront and ₹19,110 crore as deferred payment over a seven-year horizon. SC Lowy, the fourth contender, also submitted a bid but only for the wholesale book. Adani’s conservative revision has raised eyebrows considering its late entry in the third round had created furore among other suitors.

Adani, Piramal Bid for Multiple Options

Oaktree declined to comment. DHFL, Adani and Piramal didn’t reply to ET’s query.

People close to the situation said Oaktree’s offer also includes ₹1,000 crore of gains from the sale of the DHFL stake in insurance business. Since Oaktree cannot own the stake due to foreign investment restrictions, it has proposed that lenders sell the stake and keep the gains but within a stipulated deadline of March 31, 2021. Oaktree has also proposed some options in case this deadline is not met.

Piramal and Adani have bid around ₹300 crore and ₹250 crore, respectively, for the insurance stake. Each bidder did a detailed presentation after the bids were opened.

Both Adani and Piramal bid for multiple options, along with their offer for the whole company. While Adani also bid for the wholesale and slum rehabilitation book, Piramal made a separate bid for just the retail book.

Lenders are, however, likely to prefer bids for the whole company in order to maximise value rather than part sales.

The home financier had borrowed about ₹88,000 crore from lenders, depositors and bondholders. With the current highest offer at ₹36,646 crore, the lenders would have to take a large haircut of ₹50,385 crore, or almost 58%.

The lenders are likely to meet in the next few days to vote for the highest bid. Predicting the winner is extremely difficult considering the different parameters involved such as net present value, cash component, bonds and gross interest revenue during the period of corporate insolvency resolution process, sources said.

SBI Caps, the adviser to the lenders, is in the process of submitting a report on bids based on net present value, a key gauge to assess bids.

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