Piramal Capital & Housing Finance sells bad loans to Omkara ARC, ET RealEstate

July 4, 2023

MUMBAI: Piramal Capital & Housing Finance has sold a loan outstanding pool of ₹3,656 crore bad loans to Omkara ARC for ₹625 crore, said two sources close to the development.

The sale, finalised last week, marks a recovery of 17% for Piramal. The pool consists of accounts acquired along with Dewan Housing Finance Limited (DHFL) and Piramal’s own loan book.

The non-banking finance company had called for bids under a cash-security receipt structure, based on an existing offer. Omkara Asset Reconstruction Company provided a binding offer, setting the reserve price for the auction.

However, no other bidder showed interest, leading to the sale to Omkara. The purchase consideration of ₹625 crore will be divided into 15% cash and 85% security receipts, which will be subscribed by Piramal Capital or its affiliates.

Both Omkara ARC and Piramal Capital spokesperson did not respond to a request for comment.

The principal outstanding of the pool was ₹3,656 crore as of May 15, 2023, spread across 7-8 accounts. Piramal Capital has been actively selling bad loans to clean up the stressed book of DHFL, which it acquired in a bankruptcy auction in 2021.

Piramal had acquired DHFL for ₹34,250 crore, with ₹14,717 crore in cash and the remaining balance of ₹19,532 crore through bonds issued to DHFL lenders.

Piramal is looking to sell another large pool of developer loans. Phoenix ARC along with Cerberus Capital, Ares SSG with ACRE, and Oaktree Capital along with Edelweiss, are among the bidders for Piramal Group’s distressed loan of ₹2,700 crore, which is one of the largest deals in the distressed space, which is on all-cash basis.

During the fourth quarter of FY23, the company concluded four stressed asset monetisation transactions through a combination of asset sales and ARC sales. This helped the company generate over ₹12,500 crore of cash realisation through accelerated repayments and resolution proceeds. It includes sale of a bad loan portfolio of ₹5,546 crore inherited from DHFL to JM Financial Asset Reconstruction.

Earlier, Ares SSG-backed Assets Care & Reconstruction Enterprise (ACRE) had bought a principal loan outstanding of ₹1200 crore from Piramal Capital Housing spread across 11 loan accounts including Xrbia for ₹245 crore in March. The sale entailed 21% recovery for the lender.

Piramal is concentrating on developing a new asset-backed wholesale book known as ‘wholesale 2.0’ for real estate and corporate mid-market lending.

During the last fiscal year, the company improved the retail wholesale mix to 50:50, from 33% retail and 67% wholesale in FY22. The company has built wholesale 2.0 AUM worth ₹2,792 crore across real estate and corporate mid-market lending.

  • Published On Jul 4, 2023 at 08:46 AM IST

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