DHFL bidder selection: Oaktree Capital asks lenders for fair treatment

Oaktree Capital, which is in the race to acquire home finance company DHFL, has sought a fair and competitive process in the selection of the winning bid.

Oaktree and Piramal Group are engaged in neck and neck competition to get control of the mortgage lender, for which the selection process has entered the final stage.

Adani Group is also in the fray. The lenders are to begin voting this week to select the winner.

Oaktree flagged concern that some changes in the selection process were in the works ahead of the final meeting of the committee of creditors, a senior banker said.

The global financial services entity has written to the lenders and the Reserve Bank of India, seeking a level playing field. Oaktree spoke in favour of value maximisation as a principle of bankruptcy law. This has been the foundation for a third and fourth round of bidding. This is despite initially declaring that the resolution process would be a two-stage bid, a banker said. DHFL is undergoing the corporate insolvency resolution process (CIRP), and is currently being managed by an administrator who is assisted by an advisory committee, both appointed by the RBI.

All the lenders have made substantial provisions for their exposure to DHFL. This is the first case of a financial company being taken under the Insolvency and Bankruptcy Code (IBC) and the Reserve Bank of India is keen to see an effective resolution in this case.

US-based asset management fund Oaktree Capital has emerged as the highest bidder by making an offer of Rs 36,646 crore for the entire company. The offer includes Rs 11,646 crore in upfront cash and deferred payments to the lenders.

The offer also holds back Rs 1,500 crore, which will be given to the banks only after DHFL’s insurance venture is sold and all tax liabilities from the sale are met. Piramal Group, however, has offered Rs 13,000 crore upfront and the rest of its Rs 35,550-crore bid in deferred payments.

The group has made a second offer, only for the retail portfolio, at Rs 26,500 crore. 

Adani Group did not make an aggressive bid in the fourth round and was third in the race.