InvestorQ : What do you expect to be the haircut that lenders will have to take on Dewan Housing, even assuming that Adani buys out the company portfolio in total?
indhumathi Sayani made post

What do you expect to be the haircut that lenders will have to take on Dewan Housing, even assuming that Adani buys out the company portfolio in total?

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2 weeks ago
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After over a year since it was referred to bankruptcy and after nearly 12 meetings by the Committee of Creditors, there is still a big haze. Now the Adani Group is keen to buy DHFL for around Rs.35,000 crore. It has to bid more than Oaktree to win the bid.

Adani was originally only interested in the wholesale book of DHFL but has later changed its mind to take over the entire portfolio. Apart from other bidders like Oaktree, even the promoter Kapil Wadhawan has agree to repay the principal amount of the loans.

Clearly, the company has lost a lot of value due to the pandemic and that has to get reflected in the market price. In fact, DHFL saw about 28% of its loans go under moratorium as of June and collections have steeply fallen. Realty is already struggling to recoup.

What is more relevant is that most of the bids entail small upfront money with much of what banks may recover being staggered and paid only out of revenue generated over a period of time. Prima facie it looks like the haircut could be steep.

Initial estimates are that creditors may be up against a 70% haircut or even more than that. Considering the provisions banks have made against their DHFL exposure, it seems they have made peace with it, so whatever banks get out of it is bonus for them.

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