Tuesday, November 24, 2020
Home Business News Bidders hike DHFL offers, Oaktree’s remains largest - Times of India

Bidders hike DHFL offers, Oaktree’s remains largest – Times of India

MUMBAI: Bidders for DHFL have submitted fresh offers for the beleaguered housing finance company following a demand from creditors, who were unhappy with earlier submissions. While the bids have been increased significantly, lenders say they are still below expectations, leaving them in a dilemma.
Oaktree Capital, the biggest bidder which had offered Rs 28,000 crore, is understood to have increased the net present value too of its offer by around 10%. The Rs 28,000 crore promised does not show the net present value of the proposed investment as a large part of the bid amount will be paid after five years. Also, over a third of the amount is the free cash lying with the company that will be returned to lenders.
Adani Properties, which has bid for the wholesale book, has hiked its original offer by 20% to around Rs 2,700 crore. Piramal Group is offering around Rs 25,000 crore for the retail book — an increase of over 60% over its previous bid. Despite the sharp revisions, the money offered by Oaktree’s for the whole book is more than Piramal and Adani’s offers put together.
The dilemma for banks is that on the one hand the revised bids are still below expectation and, at the same time, there are no interested parties on the horizon. What makes things difficult is that the original promoters are being investigated for fraud and there are accusations against them of diverting funds. Also, unlike businesses in the realty sector where lenders can afford to wait, services companies lose value rapidly as every delay costs money in operational costs and there is no scope for appreciation in valuation as no fresh business is being done.
While banks are free to liquidate the company and sell its assets, lenders say that they are unlikely to raise more than Oaktree’s bid amount under the liquidation process. DHFL ran into troubles after a forensic audit carried at the behest of lenders revealed that loans of close to Rs 20,000 core were not traceable. A subsequent report by Grant Thornton revealed that DHFL used software to create 2.6 lakh fictitious home loan accounts, which resulted in the administrator filing a case against the promoters for fraud of Rs 12,000 crore.
Besides the three companies, SC Lowy had also put in a bid. However, the private equity investor is interested in only the non-slum rehabilitation projects of the lender for which it has bid Rs 2,300 crore. Earlier the company had put in a bid for Rs 1,500 crore. DHFL promoter Kapil Wadhawan had written to lenders, stating that its 10 projects are worth Rs 43,879 crore and offered them in settlement. Lenders, however, say that Wadhawan is trying to delay the resolution process.

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