HDFC to sell four large stressed accounts before merger

In an attempt to clean up its books before the announced merger with its subsidiary bank, Ltd is in the final stages of selling four large distressed accounts, including that of Subhash Chandra-promoted , to Assets Care and Reconstruction Enterprise (ACRE), two people aware of the discussions told ET.

ACRE, a buyer of soured loans, has given a binding bid of ₹270 crore to acquire mortgage-financier HDFC’s ₹577-crore portfolio of the four corporate accounts, the people cited above said. Its offer equates to a recovery of 47% for India’s biggest home financier.

BSE-listed Siti Networks is the biggest of the four accounts in this portfolio, accounting for ₹198.5 crore. The other three accounts are those of

, with a principal loan of ₹125 crore, Hotel Horizon at ₹163 crore, and Sterling Urban Development at ₹90 crore. These four accounts are already fully provided for in HDFC’s books, said a third person aware of the matter.

Swiss Challenge Auction Process

Backed by Ares SSG Capital, special situation fund ACRE has offered to pay Rs 270 crore upfront for the four accounts. The offer has triggered a Swiss Challenge auction wherein ACRE will have the first right to match any counteroffer HDFC receives for the distressed loan portfolio.

Prospective bidders have until June 24 evening to submit expressions of interest, a notice issued by HDFC said. It stated that any counteroffer will have to be at a mark-up of 10% over the base price of Rs 270 crore. Thus, the counteroffer has to be Rs 297 crore or above.

HDFC and ACRE did not respond to ET’s queries.

Siti Networks, a digital cable television service provider earlier known as Wire and Wireless (India) Ltd, and

are the two attractive accounts, according to one of the persons cited above. MEP is into construction of roads and collection of tolls.

HDFC has a gross loan book of Rs 5.68 lakh crore, of which Rs 1.30 lakh crore is a corporate loan book. Its gross non-performing loans stood at Rs 10,742 crore.

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