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In the first successful resolution under the IBC route in the financial services sector, Ajay Piramal’s Piramal Enterprises has acquired Dewan Housing Finance (DHFL) for ₹34,250 crore.
The acquisition includes an upfront cash component of ₹14,700 crore and issuance of 10-year NCDs worth ₹19,550 crore. The Piramal Capital and Housing Finance Ltd. (PCHFL) will merge with DHFL, and the merged entity will be 100% owned by Piramal Enterprises Limited (PEL). In January, 94% of the creditors of DHFL had voted in favour of Piramal’s resolution plan. Most DHFL creditors will recover about 46% through successful completion of the resolution process, a ₹3,810 crore entitlement of creditors from the available cash balance on DHFL’s balance sheet. There were about 70,000 creditors of DHFL.
The acquisition will help the $1.7 billion-Piramal group create one of the leading HFCs in India focused on affordable housing, an area Piramal was not focused on until now. The deal will help to have a 43 times increase of customers from 23,286 to one million customers. Post-merger, presence in HFC is likely to be the second largest after HDFC (387), with 301 branches across 24 states and 2338 employees.
“This is a big acquisition for the group and will have a long-term significant impact on growth going forward”, Ajay Piramal told Fortune India, while announcing the completion of the merger of DHFL at a press conference today. The acquisition accelerates Piramal’s 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, he said.