Piramal takes an edge over Oaktree Capital in DHFL takeover
1 min read
The DHFL takeover race is gaining momentum and is in full steam as now Piramal is holding an edge over Oaktree Capital Management, L.P. It is not just due to higher upfront cash but also due to the investment restrictions for foreign firms in Indian insurance companies.
Oaktree’s proposed takeover of DHFL’s insurance business, DHFL Pramerica Life Insurance, is complicated because it is a foreign entity.
Oaktree Capital would have to struggle with a 49% FDI insurance restriction in the takeover of the insurance unit because 49% of DHFL Pramerica Life Insurance is already owned as a foreign investment by Prudential International Insurance Holdings Ltd.
As per the rules issued by the IRDAI in 2015, Indian insurance companies should be owned & controlled by Indian residents and/or citizens at all times. Under these circumstances, Oaktree’s resolution plan cannot be implemented until foreign ownership in DHFL Pramerica is resolved.
Piramal as an Indian entity has no such problems. Its bid offers a clean solution. It is also ready to buy the insurance arm of DHFL for Rs 300 Cr.
Do you think DHFL’s shareholding in DHFL Pramerica Life Insurance Ltd can be divested?
Or is the deal now already in the hands of Piramal?
