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Battle for acquiring stressed assets under insolvency proceeding

A lot of bidders are battling to acquire the stressed industrial establishment lying under the insolvency resolution process. Not only local buyers i.e. Adani group, Piramal Enterprises etc. but foreign distressed assets firm like Oaktree Capital and SC Lowy are also in the race.

The Adani group has now offered to increase its bid for the loan portfolio of the debt-laden housing loan company Dewan Housing Finance Limited (DHFL) to Rs. 33,000 crore against its earlier offer of Rs. 31,250 crore. Oaktree Capital, the only other bidder which had offered to buy DHFL's entire portfolio, wanted to pay Rs 31,000 crore. Other bidders have complained about Adani group jumping the queue and not adhering to requirements laid down by the Resolution Plan Regulations, the latter justified its move on the ground that it was offering better value for the assets.

There are 10 such cases where a indian or foreign investment fund has acquired assets through insolvency proceedings, and in all cases, bankers have taken a haircut of 60 per cent or more.

However, these acquisitions have not always been easy. They often come with a lot of legal and procedural delays, which at times, neutralises the benefits of buying cheap. For those funds, time could be very significant as their return on investment (RoI) projections could alter significantly in case of delays, especially for distressed assets, which may see sharp erosion in values with time.

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