NEW DELHI: Piramal Enterprises on Wednesday announced the completion of the much-talked about acquisition of Dewan Housing Finance Corporation (DHFL), the first successful resolution of a financial service provider under the Insolvency and Bankruptcy Code (IBC).
Piramals have paid Rs 34,250 crore for the acquisition. The payment includes an upfront cash payment of Rs 14,700 crore and another Rs 19,550 crore through issuance of 10-year non-convertible debentures with coupon rate of 6.75%. Besides, the creditors of DHFL will also get another Rs 3,800 crore from the cash balance of DHFL. So, in total the creditors will receive Rs 38,000 crore.
After the acquisition of DHFL, the retail housing finance company will be merged with Piramal Capital Housing Finance Ltd (PCHFL). PCHFL is largely a wholesale loan company, and the acquisition of DHFL would effect a change in its focus from wholesale to retail lending.
Ajay Piramal, chairman of Piramal Group, said in a media briefing that the acquisition accelerates the group’s plans to become a leading digitally-oriented, diversified financial services conglomerate that focuses on serving Tier II and Tier-III cities.
He said the acquisition will increase PCHFL’s footprint in the retail lending space with focus on affordable housing. Post-merger, PCHFL’s customer base will rise from 23,200 to around 1 million, the number of branches will grow from 14 to 301 and its presence will increase from 40 to 236 cities.
This transaction will not only grow the retail loan book to 5 times, but also lead to a significant diversification of the overall loan book. This paves the way for achieving nearly 50:50 retail wholesale mix in the near-term. “In the medium-term, we are planning to increase the number of branches from 300-,1000,” said Ajay Piramal.