Lenders likely to invite another round of bids for bankrupt DHFL

The lenders to bankrupt Dewan Housing Finance Corporation (DHFL) are likely to invite another round of bids and give a final opportunity to all the four bidders to make the final pitch to acquire the company. 
 
The four bidders — Oaktree, Adani, Piramal group, and SC Lowy — have submitted the third round of bids but it remained unopened as some of them had objected to the highest bid made by the Adani group in the second round, saying it cannot bid for the entire company after bidding only for wholesale book in the first round.
 
Piramal group did not share the password of the email containing its third round of offers as it was worried about information leak.
 
“As the lenders want to maximise value, they may ask all the bidders to make the final bid for the company or any of its books like retail, wholesale or SRA (slum redevelopment authority) books. The bids will be called before the next CoC meeting,’’ said a senior lender. The lenders want the highest upfront payment and do not like the offers which give them money after seven years, said the source.
 
After DHFL was sent to bankruptcy court for debt resolution in December after a widespread fraud was detected in the company, the lenders were left holding the can with Rs 90,000 crore of dues.

 
The infighting among the bidders has made bankers take legal advice on how to ring fence the entire process from any litigation in future. “We want to give equal opportunity to all the bidders and the offer of the fourth round, which gives the highest upfront money will be the most important criteria while selecting the final bidder,’’ he said.
 
Piramal had revised its bid to Rs 25,000 crore for the retail book in the second round, which consisted of deferred payments in seven years with interest worth Rs 3,000 crore. The deferred payment offer was similar to US-based fund Oaktree’s offer for the entire DHFL’s assets at Rs 31,000 crore for all assets, which has also offered a major part of payments in seven years. Both Oaktree and Piramal offers consisted of giving upfront money to the lenders from the Rs 12,000 crore of cash already in DHFL's books.
 
The Adani group surprised all the bidders by submitting an offer for the entire company at Rs 31,250 crore, piping all rivals and leading to a complaint by Piramal to the CoC. The third round offer of all players is not known.
 
It’s important for the Piramal group to acquire DHFL’s retail book as its steady cash flow will complement its wholesale book, which is facing a downturn due to the slowdown in the real estate sector.
 
Both Piramal and Oaktree offers consisted of giving Rs 12,000 crore, currently in DHFL’s books, to lenders as part of their offers. Bankers, on the other hand, want more upfront cash from the bidders so that the bidders have “more skin in the game”.
 
Oaktree has told the lenders it will withdraw from the process if it finds any other discrepancy in the books of DHFL. “Lenders had very bad experience with private equities participation in the IBC process when they gave offers but withdrew once they were announced as highest bidders. They are taking legal advice on Oaktree’s conditions,” said a banking source.
 
Spokespersons of Oaktree, Piramal, and Adani declined to comment on the bidding process.