Billionaire Gautam Adani’s roads-to-mining group outbid US-based Oaktree with a Rs 33,000 crore bid for collapsed housing lender, DHFL, but rival bidders want it out of the race for allegedly missing the deadline – a charge Adani Group denies saying it followed due process and the “cartel” wants to prevent value maximisation. Four entities – Adani Group, Piramal Group, US-based asset management company Oaktree Capital Management and SC Lowy – submitted bids for DHFL in October, sources with DHFL lenders and industry said.
But lenders, who are getting DHFL auctioned to recover unpaid loans, wanted suitors to revise their bids as original offers were low. Adani Group, which had initially bid only for DHFL’s wholesale and Slum Rehabilitation Authority (SRA) portfolio, in the revised offer submitted on November 17 bid for the entire book, offering a total of Rs 30,000 crore plus interest of Rs 3,000 crore, a lending source said.
This was more than Rs 28,300 crore offered by Oaktree, they said adding the US firm’s conditional bid had outlined that it would hold back Rs 1,000 crore on insurance claims. Piramal quoted Rs 23,500 crore only for the retail portfolio of DHFL while Hong Kong-based SC Lowy bid Rs 2,350 crore for SRA.
Soon after, rival bidders cried foul over Adani’s bid, saying the group had submitted the bid past the deadline and that it cannot expand on its original plan. All the three rival bidders sought disqualification of Adani, the source said.
Adani has countered the move, writing a detailed letter to the DHFL administrator, who is overseeing the sale, saying it had originally put in an expression of interest (EoI) for both – full book and wholesale and SRA portfolio. Sources said the November 22 letter said its October bid was only for wholesale and SRA assets of DHFL as it was hopeful that it along with Piramal Group would complete the deal (Piramal Group bid only for the retail assets).
But on the opening of bids on November 9, Adani saw bids put in by rivals did not reflect the value of the company and decided to bid for the entire book. In the letter, Adani Group said, its bid was submitted before 10.00 am on November 17 and was in accordance with the bid document.
It went on to quote the relevant section of the bid document that gave liberty to the administrator to examine thebid received at any stage of the resolution plan submission process and rival bidders had no right to object to such submission. To threat by some bidders to withdraw from the process if Adani’s bid was considered, the group said they are “acting together as a cartel to influence the CIRP process in a manner aimed at eliminating or reducing competition which should also impact the value maximisation objective.” CIRP stands for the corporate insolvency resolution process.
It added that its unconditional bid provided maximum value to all stakeholders. In November, the Reserve Bank referred DHFL, the third-largest pure-play mortgage lender, to the National Company Law Tribunal (NCLT) for insolvency proceedings.
DHFL was the first finance company to be referred to NCLT by the RBI using special powers under section 227. Prior to that, the company’s board was superseded and R Subramaniakumar was appointed as the administrator. He is also the resolution professional under the Insolvency and Bankruptcy Code (IBC).
As of July 2019, the company owed Rs 83,873 crore to banks, the National Housing Board, mutual funds and bondholders.
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