Piramal Group acquires crisis-hit Dewan Housing Finance Corporation (DHFL)

piramal group acquires crisis hit dhfl

The amount of ₹34,250 crores ($4.61 billion) paid by Piramal will be through a combination of cash and non-convertible debentures, to be paid to the creditors from the cash balance available with DHFL.

After a long tussle, Piramal Enterprise Ltd has finally acquired Dewan Housing Finance Corporation Ltd (DHFL) by paying ₹34,250 crores to the lenders. The Piramal group aims to diversify its loan book and scale up its retail lending book with this acquisition. Creditors of DHFL, which include about 20 Indian banks and many other financial institutions, would recover an aggregate of ₹38,000 crores ($5 billion) from the resolution process of the firm and acquisition by Piramal Enterprises.

Many Indian banks, including public sector banks, had exposure to the crisis-hit housing finance firm Dewan Housing Finance Corporation, the most hit being the State Bank of India. There are about 20 Indian banks and many other financial institutions that have lent to DHFL over a period of time. As per the analysts, this is one of the biggest resolutions to date, and the move will bring a good recovery in the banking sector.

The amount of ₹34,250 crores ($4.61 billion) paid by Piramal will be through a combination of cash and non-convertible debentures, and an amount of around ₹3,800 crores will be paid to the creditors from the cash balance available with DHFL.“DHFL’s resolution has finally happened, and the recovery upgradation and reversal provision will be visible in banks in the coming quarters, which is positive for the sector and the banks having exposure to the firm,” said SiddharthPurohit, research analyst at SMC Securities.