Piramal Capital sells 3,656 crore bad loans for 625 crore for 625 cr

Mumbai's Piramal Capital Housing Finance has sold a loan outstanding pool of 3,656 crore bad loans for Omkara ARC for 625 crore, said two sources close to the development. The sale, which has been 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 firm had called for bids under a cash-security receipt structure, based on an existing offer. The auction was held on the basis of a binding offer from Omkara Asset Reconstruction Company, which set the reserve price for the auction. There were no other bidders in the bid, leading to the sale to Omkara. The purchase amount of 625 crore will be divided into 15 percent cash and 85% security receipts, which will be subscribed by Piramal Capital or its affiliates. Both Omkara ARC and Piramal Capital declined to respond to a request for comment. As of May 15, 2023, the pool's principal assets were Rs. 3,656 crore, spread across 7 - 8 accounts. Piramal Capital has been actively selling bad loans to clean up the stressed DHFL book which it acquired in a bankruptcy auction in 2021. The DHFL had acquired DHFL for 34,250 rupees, with 14,717 rupees in cash and the remaining balance of 19,532 rupees through bonds issued to DHFL lenders. The company is looking to sell another large pool of developer loans. The bids for Piramal Group's distressed loan of 2,700 crore are among the bidders at the auction, with Cerberus Capital, Ares SSG, and Oaktree Capital among the bidders. In the fourth quarter of FY23, the company completed four stressed asset monetization transactions through a combination of asset sales and ARC sales. The firm generated more than 12,500 crore of cash realisation through accelerated repayments and resolution proceeds. The transaction involves sale of a bad loan portfolio of Rs. 550,000 inherited from DHFL to JM Financial Asset Reconstruction. Earlier in March, Ares SSG-backed assets Care Reconstruction Enterprise ACRE had bought a loan of 1200 crore from Piramal Capital Housing in Xrbia, spread across 11 loan accounts including Xrbia. The deal entails a 21% recovery for the lender. Piramal is working on creating a new asset-backed wholesale book, called 'wholesale 2.0', for real estate and corporate mid-market lending. The last fiscal year, the company increased the retail wholesale mix to 50:50, from 33% retail and 67% wholesale in FY22. The company has raised the value of their 2.0 AUM from 2,792 crore to 1,792 crore through corporate-mediterranean lending and real estate.