More debts would be sold by Piramal Capital for Rs 1,669 crore

5 Jul 2023 , 12:48 PM

A stressed loan portfolio of Rs 2,437 crore that is spread across 14 accounts is being discussed for sale by Piramal Capital & Housing Finance to JM Financial ARC for $1,669 crore. This results in a 68% account recovery.

 A Swiss auction was used to sell the loan because it promotes transparency and maximizes asset value through competitive bidding. JM Financial ARC placed the anchor bid, which brought the auction to a close on June 27. The loan will be sold to the anchor bidder because no other bidder expressed an interest.

The sale was set up as a cash-security receipt (SR) transaction, with 87% of the consideration being in the form of security receipts and 13% being paid in cash.

In response to a request for comment, neither a Piramal nor a JM Financial ARC spokesperson was available.

In less than 10 days, the business applied to sell a second loan. It also sold a pool of outstanding loans worth a total of 3,656 crores to Omkara ARC last week for 625 crores. Piramal recovered 17% of its investment from the transaction. As of May 15, 2023, the principal outstanding of the pool was Rs 3,656 crore and was split across 7-8 accounts.

The inherited soured advances from the DHFL acquisition are among these exposures. In a bankruptcy, the mortgage lender was sold.

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