In a historic deal in Indian financial services sector, it is the most successful resolution under the Insolvency and Bankruptcy Code (IBC) and this is also the largest in terms of value. Whereas, Ninety four per cent of the creditors gave the plan the go ahead. Piramal Enterprises on September 29 announced that it has acquired Dewan Housing Finance Corporation (DHFL) by paying the latter’s creditors Rs 38,000 crore.
This includes Rs 34,250 crore to be paid by Piramal Capital and Housing Finance (PCHFL) in cash and non-convertible debentures, and Rs 3,800 crore from the cash balance of DHFL.
Piramal Group Chairman Ajay Piramal said the transaction marks a successful closure of the first resolution under the IBC rules in the financial services sector and sets a precedent for future resolutions.
“We have now made the payment of the consideration amount. In value terms, the transaction is among the largest resolutions to date. We will merge PCHFL and DHFL and the merged entity will be called Piramal Capital and Housing Finance Limited,” he said.
The new entity will retain the name PCHFL. It will serve over one million lifetime customers, have a presence across 24 states with a network of 301 branches and will have a portfolio with a 50:50 retail-wholesale mix.
Piramal further said that this acquisition is in line with a transformation they have been executing over the past two years by raising Rs 18,000 crore in equity and reducing their debt-to-equity ratio significantly.
