hdfc: HDFC gets an all-cash offer from Omkara ARC for bad loan portfolio

India’s leading mortgage lender HDFC has received a bid from Omkara Asset Reconstruction Company for its wholesale bad loan portfolio valued at ₹1,195 crore, which includes several developer loans, including the Radisson Blu Hotel in Ghaziabad. The bid comes ahead of the fiscal year-end, but the deal is unlikely to be concluded this month.

According to sources, three to four large asset reconstruction companies examined the portfolio, but HDFC ultimately received a bid from Omkara ARC for the entire pool. HDFC is currently evaluating the bid, and a decision is expected in the coming weeks. The lender may ask for more bids to maximise recovery. HDFC is expected to complete its planned merger with HDFC Bank in the next two quarters.

“HDFC is not in a rush to close the deal by end of this month,” a source said. “The offer from Omkara is below expectation and they may ask for bids from other ARCs before closing the deal.”

The recovery for the lender from the sale is expected to be lower than in previous rounds, with Assets Care and Reconstruction Enterprise (ACRE) buying four corporate accounts from HDFC for ₹270 crore against a total loan of ₹577 crore, resulting in a 47% recovery. In October, HDFC sold a ₹1,180 crore loan to ACRE for ₹602 crore, resulting in a 51% recovery.

HDFC had requested bidders to bid for either the entire pool or select accounts. The portfolio on sale includes a ₹600 crore loan for the Radisson Blu hotel in Ghaziabad and ₹595 crore for 6-7 other real estate developer loans across several cities.

Alvarez & Marsal, a consulting firm, is seeking buyers for the loan, and HDFC is reportedly looking to sell another pool, for which it has not yet given any indication.

The bid from Omkara ARC is in all cash. HDFC did not respond to queries on the bid but said no such transaction is envisaged in March. Omkara ARC did not respond to a request for comment.

HDFC is in the process of selling bulky real estate loans before the mega-merger with HDFC Bank. According to a report by Care Edge Ratings, the merged entity will have total advances of over ₹ 22 lakh crore, based on December 31, 2022, figures, and a net worth of over ₹ 3 lakh crore.

HDFC Bank is currently the second-largest lender in India, with advances of ₹15.2 lakh crore, while HDFC is the country’s largest housing finance company, with gross loans of ₹7 lakh crore as of December 31, 2022.