Piramal Group completes Rs34,250-cr acquisition of Dewan Housing

Piramal Group on Wednesday announced the completion of its  acquisition of housing finance firm Dewan Housing Finance Corporation (DHFL) for a total consideration of Rs34,250 crore.

The first successful resolution under the IBC route in the financial services sector, Piramal’s Rs34,250-crore acquisition of DHFL is also the largest resolutions in value terms in the financial sector.
The creditors of DHFL (including FD holders) would recover an aggregate amount of around Rs38,000 crore from the resolution process of DHFL. 
This amount comprises Rs34,250 crore to be paid by PCHFL as a combination of cash and non-convertible debentures and an amount of around Rs3,800 crore, which is the entitlement of creditors (as per the resolution plan), from the cash balance available with DHFL.
Piramal Group’s resolution proposal received consent of 94 per cent of the creditors. Most of the DHFL creditors are recovering nearly 46 per cent through successful completion of the resolution process, the company stated in a release.
There were around 70,000 creditors of DHFL and most of them are recovering nearly 46 per cent of their pending dues through the successful completion of resolution process. The total consideration paid by the Piramal Group at the completion of the acquisition includes an upfront cash component of Rs14,700 crore and issuance of debt instruments of Rs19,550 crores (10-year NCDs at 6.75 per cent p.a. on a half-yearly basis).
The proposal has received approvals from Reserve Bank of India (RBI), Competition Commission of India (CCI) and the National Company Law Tribunal (NCLT).
The acquisition will result in the merger of Piramal Capital and Housing Finance Ltd (PCHFL) with DHFL into a new entity named PCHFL.
According to Piramal Enterprises, the merger will create one of the leading housing finance companies in India, focused on affordable financing.
“The acquisition will now provide an India-wide infrastructure with a large branch network as well as a sizable customer base that will leverage the technology-driven multi-product retail lending digital platform," the company stated. 
The new entity will have presence across 24 states with a network of 301 branches, 2,338 employees and access to over a million customers and provide an India-wide platform to address diverse financing needs of the under-served ‘Bharat’ market.
“We are very pleased to announce the consideration payment made towards the completion of this exciting acquisition. 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,” Ajay Piramal, chairman, Piramal Group, said.
“The combined entity will have 301 branches, 2,338 employees and over 1 million lifetime customers. We will be a dominant player in the fast growing affordable housing segment. Over the last two years we have successfully built our next-gen technology platform, advanced analytics engine and AI/ML capabilities. This acquisition allows us to implement these technologies across a much larger base of customers. The new merged entity is poised to be at the forefront of the digital-first retail lending market in India,” Anand Piramal, executive director, Piramal Group, said.
PCHFL plans to significantly diversify the loan book towards retail financing – to nearly 50:50 retail wholesale mix in the near-term, scaling up the retail loan book to ~5 times. 
At the same time, Piramal Group expects a reduction in the average borrowing cost and a further improvement in the asset-liability profile of its financial services business.
PCHFL will offer services such as loans for used cars and two-wheelers, education loans for vocational and online courses; small builder finance to meet construction finance requirement; unsecured business loans, personal loans and loan against securities.