A tough call for DHFL lenders, as Oaktree only manages to overtake Piramal

U.S. asset management fund Oaktree Capital has emerged as the highest bidder for bankrupt real estate firm DHFL by making a bid of Rs 36,646 crore for the entire company. The offer includes Rs 11,646 in advance and deferred payments to the lenders. The offer also withholds Rs 1,500 crore which will be given to banks only after DHFL’s insurance project is sold and all tax debts from the sale will be fulfilled.

The Piramal group, however, offered a down payment of Rs 13,000 and the balance of its Rs 35,550 bid in deferred payments to the company. The group also made a second offer – only for the retail portfolio at 26,500 rupees.

The Adani group did not make an aggressive bid in the fourth round and was third in the race. All offers were made with several conditions, and the lenders will have to call taking their net present value. Lenders are expected to meet in the third week of December to vote on the two best proposals.

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Oaktree will keep DHFL’s life insurance in trust and once the proceeds of the sale go in after regulatory approval, the proceeds will go to the lenders, said a source close to the development. The Piramal group made the offer with insurance sales proceeds worth Rs 200 crore going to the lenders. “There is not much difference between Piramal and Oaktree’s offers, as both include 3,000 rupees interest earned on the cash in DHFL’s books,” a source said. Moreover, while Piramal’s offer for the whole company is 32,350 rupees, the Oaktree offer is worth 32,646 crores. The banks are having a hard time calling for offers. DHFL has Rs 12,000 crore in its books and all offers for cash advance are made on that basis. The Adani group however has made a bid of just Rs 29,860 crore, less than it did in the third round. SC Lowy, who made a conditional bid of Rs 2,300 for the corporate lending portfolio, did not make a bid in the fourth round.

A loan source said they will have to study all the offers carefully because Oaktree, which is a foreign company, has offered deferred payments. “We need to see what guarantees are on Oaktree’s table – if they decide to leave India tomorrow. In the case of Piramal and Adani, the lenders are using other means because they are local companies,” the source said. The bonds issued by Piramal to the lenders will be much better than Oaktree, said another banker.

Spokesmen for the Piramal and Adani groups did not comment, while Oaktree officials were not available to comment.

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