Piramal Enterprises acquires DHFL for Rs 38,000 cr

Piramal Enterprises announced on Wednesday that it has acquired Dewan Housing Finance (DHFL) for Rs 38,050 crore, out of which Rs 34,250 crore will be paid in a combination of cash and non-convertible debentures, and Rs 3,800 crore as the entitlement of the creditors per the resolution plan. The company called it the first successful resolution under the IBC route in the financial services sector and among the largest resolutions in value terms. This acquisition took place after 94 per cent of the creditors of DHFL voted in favour of Piramal’s resolution plan. It has also obtained approvals from Reserve Bank of India (RBI), Competition Commission of India (CCI), and National Company Law Tribunal (NCLT).

The company said that there were around 70,000 creditors of DHFL and most of them will recover nearly 46 per cent of their pending dues through the resolution.

Piramal Capital and Housing Finance (PCHFL) and DHFL will merge to form the entity that will be named PCHFL. The entity, 100 per cent owned by Piramal Enterprises, will be one of the leading housing finance firms in the country, the company said in a statement. The company that will focus on affordable financing will have access to over 1 million lifetime customers. PCHFL will be present across 24 states with a network of 301 branches and 2,338 employees.

“This accelerates our plans to become a leading digitally oriented, diversified financial services conglomerate that focuses on serving the financial needs of the unserved and underserved customers of our country. An important characteristic of any advanced economy is a robust insolvency code. The landmark bankruptcy reforms have made it possible to solve complex resolutions like this in a more complete and timely way,” said Ajay Piramal, Chairman, Piramal Group.

The company aims to address the diverse financing needs of the under-served market in India. It will also diversify the loan book to ensure 50:50 retail wholesale mix in the near term. Piramal added that the acquisition will increase their retail loan book by five times.

Piramal said that this acquisition is in line with their strategic plans to transform their financial services business in the next two years.

It said that the company raised Rs 18,000 crore of equity, strengthening the balance sheet.

Anand Piramal, Executive Director, Piramal Group said that the acquisition will enable them to  become a dominant player in the fast-growing affordable housing segment. “The new merged entity is poised to be at the forefront of the digital-first retail lending market in India,” he said.