Piramal Group acquires DHFL for a total of Rs 34,250

Piramal Group acquires DHFL for a total of Rs 34,250

Piramal Enterprises on Wednesday said it has completed the acquisition of Dewan Housing Finance Ltd (DHFL) by paying a consideration amount of Rs 34,250 crore. This is the first successful resolution of a financial services company under the Insolvency and Bankruptcy Code (IBC).

On completion of the acquisition, Rs 34,250 crore was paid by Piramal Group, including an upfront cash component of Rs 14,700 crore and issuance of debt instruments of Rs 19,550 crore. on an annual basis).

In a statement to the exchanges, Piramal Enterprises said, the creditors of DHFL will recover a total of Rs 38,000 crore from the resolution of DHFL, which includes Rs 34,250 crore paid by Piramal Enterprises and Rs 3,800 crore from DHFL’s cash balance. “DHFL had 70,000 creditors and most of them are recovering around 46 per cent of their pending dues through successful completion of the resolution process,” the statement said.

As per the resolution plan, Piramal Capital and Housing Finance Limited (PCHFL) will be merged with DHFL and Piramal Enterprises Limited will have 100% ownership of the merged entity. The merged entity will have 301 branches and 2,338 employees to cater to nearly one million lifetime customers across 24 states, making it one of the leading housing finance companies in India, focusing on the affordable housing segment.

The acquisition of DHFL will enable Piramal to grow its retail book by around 5x and also diversify the overall loan book, thereby achieving the desired mix of around 50:50 retail/wholesale mix.

Piramal Enterprises said, “..the transaction will reduce the weighted average borrowing cost by approximately ~130 basis points and further improve the Asset Liability Management (ALM) profile of our financial services business.”

“The transaction will also significantly improve the use of equity in our financial services business, with the net debt-to-equity of the financial services business becoming efficient in the near-term from 1.6x by June-2021 to 3.5x in the near-term.” .

Piramal Enterprises is now also looking to offer used car and two wheeler loans; education loans for vocational and online courses; Small builder finance to meet construction finance requirements; unsecured business loans; Personal loans and loans against securities.

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