Piramal Capital to sell DHFL bad loan portfolio of Rs 5,500 crore

10 Mar 2023 , 10:36 AM

Piramal Capital & Housing Finance has begun the sale of a bad loan portfolio inherited from Dewan Housing Finance (DHFL) totaling Rs 5,546 crore, with the purchase price in the binding bid set at a 46% recovery threshold of Rs 2,550 crore, said sources aware of the development.

A Swiss Challenge will be presented against the current leading bid submitted by JM Financial Asset Reconstruction Co (JM Financial ARC).

Piramal has requested that interested bidders submit expressions of interest with an offer amount that is at least 10% higher than the base offer of Rs 2,550 crore. Bids can be made in all cash or cash-plus-security receipts, with 15% of the bid amount paid in cash and the rest in security receipts. Security receipts are quasi-debt instruments that are redeemed when the underlying debt is recovered by the ARC.

Piramal received a total purchase consideration of Rs2,550 crore, which included 15% cash payment and 85% security receipts. Piramal Capital or its affiliate will subscribe to the receipts. Piramal has been selling bad loans to clean up the stressed book of DHFL, which he purchased in a bankruptcy auction.

Piramal acquired DHFL in September 2021 for Rs34,250 crore, including Rs14,717.4 crore in cash. It also issued bonds to DHFL lenders for the remaining amount of Rs19,532.5 crore.

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