InvestorQ : Why did the COC for Dewan Housing find the offer by Piramal the most attractive?
Dhwani Mehta made post

Why did the COC for Dewan Housing find the offer by Piramal the most attractive?

Dilmini Mercia answered.
1 year ago

At the outset, the Committee of Creditors or COC had clarified that there would be some critical parameters on which the vote would be given. While the total quantum of payment for DHFL was important, the COC also gave a big weightage to factors like upfront cash payment, investment into the DHFL, clarity on the insurance JV etc.

On the above lines, the COC voted overwhelmingly in favour of Piramal Enterprises to take over Dewan Housing. Nearly 94% of the votes for Piramal were favorable. PEL has committed close to Rs.38,000 crore as the total sum payable of which over Rs.12,000 crore will be paid up-front, which was perhaps what clinched the deal in their favour.

The COC have given a much higher weightage to upfront cash payment, which is where PEL appears to have scored. In addition, Piramal Enterprises has also committed to infuse capital into Dewan Housing in order to turn around the company. Piramal also does away with the confusion over the insurance business, which it will take over.

While the COC has not spoken anything on record, the indications are that the COC actually found the Oaktree offer to be too convoluted. Oaktree also lost out on the much lower upfront payment that it was offering and the constraints on its taking over the insurance business of DHFL. Adani was not really in the race as its quote was much lower.