Investors to move SC against plan to delist DHFL shares
PremiumMany of DHFL’s retail shareholders have formed joint action groups to try and recoup their losses
MUMBAI : A section of retail investors of Dewan Housing Finance Corp. Ltd (DHFL) plan to approach the Supreme Court against a move by the National Company Law Tribunal (NCLT) to allow delisting of the mortgage lender’s shares as part of its resolution plan. In their plea, investors are set to accuse NCLT and the Securities and Exchange Board of India (Sebi) of failing to adequately inform them about the impending delisting, which is part of the Piramal group’s approved resolution plan under the Insolvency and Bankruptcy Code.
A petition is yet to be formalized and filed in court.
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Piramal group’s proposal to delist DHFL was accepted by DHFL’s creditors in January. Unaware of this, many investors continued to buy DHFL shares, anticipating a turnaround under its new owners. The number of retail shareholders of DHFL rose from 316,000 in December to 325,000 by March. On 14 June, shares of DHFL stopped trading on the exchanges, which informed investors that the resolution plan provides for their delisting.
DHFL ended its trading session at ₹16.70 on the day after having hit the 10% lower circuit. However, in the weeks before 14 June, the stock saw significant trading, even hitting upper circuits after the resolution plan was approved by NCLT, encouraging investors.
Now, many of DHFL’s retail shareholders have formed joint action groups to try and recoup their losses. One such group with about 250 members plans to move the Supreme Court with a plea to keep DHFL listed so that they can recover at least a part of their investments. They feel DHFL has enough assets.
Mint spoke to more than a dozen DHFL investors who feel wronged. “DHFL has assets worth over ₹1.05 trillion and a strong loan recovery process can actually fetch more money than what has been projected by the Piramal group,’’ said a Telangana-based investor who lost his entire ₹5 lakh investment in DHFL shares. “If managed well, the stock can yield decent appreciation so that small shareholders get a natural exit through a fair market process," said the person.
“Around ₹40,000 crore is due to be recovered from DHFL’s borrowers and even if 10% of these dues are recovered, the court or Sebi must direct Piramal to utilize a part of this recovery money to compensate retail shareholders,’’ said another investor who is a Gurgaon-based brand management professional.
“In DHFL’s case, most retail investors were of the impression that it will remain listed like Ruchi Soya even after IBC, and Sebi cannot wash away its responsibility," said a Gurugram-based investor who lost ₹204,000 of his ₹300,000 investment.
“Some brokers, too, may have mis-sold DHFL stock for earning commission. Investors should have been more careful. Until NCLT or a high court approves any resolution, neither Sebi nor exchanges nor brokers can ascertain whether the company will remain listed or not," said Sandeep Parekh, founder of corporate law firm Finsec Law Advisors.
A Kochi-based man who lost his job during the lockdown had ₹13 lakh in DHFL shares; a Telangana-based post-doctorate research fellow ₹5 lakh; and an army personnel in the North-East ₹60 lakh.
Mint first reported on 21 January that DHFL shares will get delisted.
Sebi, Piramal and NCLT could not be immediately contacted.
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