Lenders to debt-ridden DHFL to meet on Monday to take call on bids

The committee of creditors (CoC) of debt-ridden DHFL is scheduled to meet on Monday to take a call on four bids, including from Adani Group and Piramal Enterprises, received as part of resolution process for the beleaguered firm, sources said.

Earlier this month, Dewan Housing Finance Corporation Ltd (DHFL) had received four bids for either picking up stake in the company or buying out assets. The four bidders are Adani Group, Piramal Enterprises, US-based Oaktree and Hong Kong-based SC Lowy.

In November, the Reserve Bank referred DHFL, the third largest pure-play mortgage lender, to the National Company Law Tribunal (NCLT) for insolvency proceedings.

DHFL was the first finance company to be referred to the NCLT by the RBI using special powers under Section 227.

Prior to that, the company's board was superseded and R Subramaniakumar was appointed as the administrator. He is also the resolution professional under the Insolvency and Bankruptcy Code (IBC).

Sources said DHFL lenders will meet on Monday to make a decision on received bids.

Since investors have submitted poor bids, lenders are set to lose whopping Rs 68,000 crore against the total liabilities of Rs 95,000 crore, according to sources.

As a result, lenders are likely to reject the bids as they are far lower than the Fair Value (FV) and Liquidation Value (LV) arrived at by the independent valuers on behalf of the debtors, they said.

DHFL did not respond to an email seeking comments on the matter.

The Mumbai-based mortgage player had total assets worth Rs 93,000 crore with retail and wholesale asset portfolio pegged at Rs 33,000 crore and Rs 48,000 crore, respectively.

SBI is the lead banker with an exposure of over Rs 10,000 crore to DHFL, while LIC and EPFO will also have to write off nearly Rs 10,000 crore.

Oaktree has submitted bid for the entire company and the bid value is Rs 20,000 crore as against the admitted liability of Rs 95,000 crore with Rs 10,000 crore cash in hand, according to sources.

Therefore, sources said, accepting Oaktree bid would result in a write-off of Rs 65,000 crore for the lenders led by SBI.

Adani Group has bid for DHFL's Rs 40,000-crore wholesale and Slum Rehabilitation Authority (SRA) portfolio, valuing it at Rs 3,000 crore, they said.

Piramal Enterprises has bid for DHFL's retail portfolio. It has quoted Rs 12,000 crore for the business and is asking for 18 per cent yield on this portfolio, they said.

According to bankers, the bid of SC Lowy, the fourth bidder, comes with so many conditions that it is unlikely to be considered.

Some lenders are of opinion that DHFL has an attractive zero risk retail portfolio and it should be acquired by the banks themselves, instead of offering that to any bidder at such a low value.

The lenders and bidders are also jittery due to the ongoing CBI and ED investigation against the alleged fraud and siphoning off of huge value by DHFL promoters Wadhwan Brothers by fudging of accounts and creating 2.6 lakh fake accounts, which have been termed as "Bandra Book Entities" in the forensic audit conducted by Grant Thornton.

The Enforcement Directorate (ED) had arrested DHFL promoters Kapil Wadhawan and Dheeraj Wadhawan in May 2020 in the Yes Bank fraud case, and both have been in jail since then.

According to a filing last month, fraudulent transactions worth Rs 17,394 crore were reported at DHFL during FY07 to FY19, as per a report of transaction auditor Grant Thornton.

Fund diversion by the promoters of DHFL resulted in lenders classifying DHFL account as "fraud".

Another fraudulent transaction worth Rs 12,705.53 crore was reported by the forensic audit, followed by the third one earlier this month.