Piramal Enterprises Limited announced the payment of consideration for the acquisition of Dewan Housing Finance Corporation Ltd. (DHFL).
Speaking on the development, Ajay Piramal, Chairman, Piramal Group said, “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.”
Anand Piramal, Executive Director, 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 fastgrowing 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.”
In January 2021, 94% of the Creditors of DHFL voted in favor of Piramal’s resolution plan. Approvals were also obtained from the RBI, CCI and NCLT for the completion of this transaction. As a part of the process, Piramal Capital and Housing Finance Ltd. (PCHFL) will merge with DHFL. The merged entity will be 100% owned by Piramal Enterprises Limited, the statement said.
The creditors of DHFL (including FD holders) would recover an aggregate amount of ~Rs.38,000 Crores from the resolution process of DHFL. This amount comprises of (i) ~Rs. 34,250 Crores to be paid by PCHFL as a combination of cash and Non-Convertible Debentures and (ii) an amount of ~Rs. 3,800 Crores, which is the entitlement of creditors (as per the resolution plan), from the cash balance available with DHFL, a statement said.
The total consideration paid by the Piramal Group of ~INR 34,250 Crores at the completion of the acquisition, includes an upfront cash component of ~INR 14,700 Crores and issuance of debt instruments of ~INR 19,550 Crores (10-year NCDs at 6.75% p.a. on a half-yearly basis), the company said.
“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. It enables the company to significantly grow and diversify the retail loan book through product innovation, customised offering and superior customer experience. The share of retail financing is likely to improve to 50% in near-term and 67% in mid-to-long term. The growth in the retail loan book will facilitate capital efficiency in the financial services business, the company added.
The company will offer services such as used cars and two-wheeler loans; education loans for vocational and online courses; small builder finance to meet construction finance requirement; unsecured business loans; personal loans and loan against securities, it said.
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