Piramal Capital & Housing Finance sold Omkara ARC an outstanding loan pool of Rs 36.56 billion in bad loans for 6.25 billion. Last week's completed deal represents a 17% increase in Piramal's value. The group consists of accounts acquired alongside Piramal's own loan book and Dewan Housing Finance Limited (DHFL).
Based on an existing offer, the non-bank financier had requested bids for a cash security receipt structure. Omkara Asset Reconstruction Company made a legally binding offer and established the auction's reserve price.
The sale to Omkara was made possible by the absence of any other interested bidders. Piramal Capital or one of its affiliates will underwrite 85% of the securities receipts and 15% of the 625 crore rupee purchase consideration.
As of May 15, 2023, the fund has a total outstanding principal balance of Rs 3.76 billion, divided into 7-8 accounts. Piramal Capital actively purges bad loans from DHFL's stressed book, which it purchased at a bankruptcy auction in 2021, in order to de-risk the portfolio.
Piramal paid Rs 342.5 billion for DHFL, of which Rs 147.17 billion were paid in cash and the remaining 195.32 billion were paid through bonds issued to DHFL's lenders.
Piramal is seeking to sell a sizable quantity of additional developer loans. One of the largest projects in the troubled area, the Piramal Group's distressed loan of Rs 27 billion is being bid on by a number of parties, including Phoenix ARC with Cerberus Capital, Ares SSG with ACRE, and Oaktree Capital with Edelweiss.
Through a combination of asset sales and ARC sales, the company completed four stressed asset monetization transactions during the fourth quarter of fiscal 23. As a result, the business was able to realize approximately Rs 125 billion in cash through accelerated repayments and settlement income. Included in it is the disposal of a bad loan portfolio worth Rs 55.46 billion rupees that JM Financial Asset Reconstruction inherited from DHFL.
Prior to this, in March, Piramal Capital Housing sold a Rs 1.2 billion equity loan distributed across 11 credit accounts, including Xrbia, to Assets Care & Reconstruction Enterprise (ACRE), which is financed by Ares SSG. For the lender, the transaction represented a 21% recovery.
For middle market real estate and corporate loans, Piramal is working on creating a new asset-backed wholesale ledger known as "wholesale 2.0."
The company increased its mix of retail wholesalers to 50:50 during the most recent fiscal year, up from 33% retail and 67% wholesale in FY22. On middle market real estate and corporate loans, the organization has built 2.0 wholesale AUM worth Rs 2,792 million.
See also:
HDFC attempts to sell stressed loans ahead of merger with HDFC Bank
PNB Housing Finance, others in push to offload bad loans
