Mumbai: Piramal Capital and Housing Finance is set to sell over ₹4,300-crore distressed asset portfolio to asset reconstruction company IndiaRF ARC in one of the most extensive clean-ups in the financial sector, two people aware of the development told ET.
IndiaRF, a joint venture between Bain Capital and Piramal Group, has given the highest bid of ₹710 crore for the ₹4,367-crore distressed loan portfolio.
Its offer has triggered a Swiss challenge auction scheduled for Thursday (July 14), people cited above said.
In a notice on its website, Piramal Capital and Housing Finance (PCHF) stated that any counterbid under the Swiss challenge should be at least 5% higher than the anchor bid of ₹710 crore. IndiaRF, as the anchor bidder, will have the first right to match any counteroffer that Piramal receives for the portfolio.
Officials from the distressed asset market said PCHF is unlikely to receive any counteroffer for the distressed portfolio.
Most loans in the portfolio are from Dewan
(DHFL) books, the company it acquired under corporate insolvency proceedings last year.
DHFL was merged with PCHL with effect from September 28, 2021. PCHF is a 100% subsidiary of listed (PEL).
PCHF and IndiaRF ARC declined to comment.
The ₹710-crore offer by IndiaRF is under the 15:85 structure, wherein 15% of the consideration is paid upfront, and 85% is paid in the form of security receipts (SR) to be redeemed when the ARC recovers money from defaulting borrowers.
IndiaRF would pay ₹106.5 upfront and issue SR for ₹603.5 crore.
PCHF had acquired DHFL for ₹34,250 crore through cash consideration of ₹14,717.4 crore and issued bonds to DHFL lenders for balance ₹19,532.5 crore. The cash component includes ₹12,800 crore paid out of acquired cash, according to PEL’s annual report for FY22.
The loan book of PCHF rose 64% to ₹54,235 crore as of September 2021 from ₹32,994 crore as of March 2021, according to a rating report by
. In the same period, its gross non-performing loans declined to 2.1% from 3.4%.
The total income fell to ₹2,345 crore for six months ending September 2021 from ₹5,088 crore as of March 31, 2021, the ICRA report stated.
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