Shares of the Mumbai-based troubled shadow lender Dewan Housing Finance Corporation Limited (DHFL) were locked in a 5 per cent upper circuit at Rs 27.50 on the BSE after its committee of creditors (CoC) approved a resolution plan submitted by Ajay Piramal-led Piramal Capital and Housing Finance. Creditors of DHFL voted in favour of Rs 37,250 crore takeover bid submitted by the Piramal Group for the troubled shadow lender. (Track DHFL share price here)
DHFL, which was one of the country’s top non-banking finance company in the past, accumulated total debts of almost Rs 1 lakh crore before defaulting on payments to its creditors.
Three entities – Adani Group, Piramal Group and the US-based asset management company Oaktree Capital Management – had been invited to bid for DHFL’s entire loan book.
For Piramal, taking over rival Dewan would help the conglomerate double down on its real estate-focused shadow banking business. The development also brings some resolution to a key case in the country’s insolvency system, where high profile cases have at times lingered on for years. Dewan was put into an insolvency process after it was seized by the central bank in a shock move in late 2019.
The non-bank financing industry went into a crisis in 2018 when financier IL&FS Group suddenly stumbled, and the pandemic added to strains. Policy makers have stepped in with support, channeling liquidity to the sector last year.
As of 11:45 am, there were over 6.5 lakh pending buy orders for DHFL shares on the BSE.