RCap Auction Postponed To April 11 Even As Torrent Pursues Litigation

Lenders have postponed the second auction to sell bankrupt Reliance Capital’s assets by a week to April 11, even as the Torrent group, the highest bidder in the first round, pursues litigation in the Supreme Court.

Lenders are expecting the Hinduja group and Torrent to participate in the second auction and maximise the value of the assets. American financial services major, Oakteee may also join the race, said a source.

Lenders have decided to give the bidders additional time to prepare for the bid as the competition is likely to go up in the next round.

The Committee of Creditors (COC) has also assured the bidders it will look at their request not to consider any offers outside the auction process once the results are out. This will ensure value maximisation for the lenders and transparency in the bidding process.

The highest bidder in net present value terms will be declared post auction to bring finality to the resolution process.

The lenders have kept Rs 9,000 crore as the floor price for the second auction, which can be raised by Rs 500 crore in the second round and by Rs 250 crore in the next. All bidders will have to give Rs 8,000 crore as upfront cash with their offers.

Torrent, which had made an offer of Rs 8,650 crore in the first round, may participate in the second auction but it will be subject to the Supreme Court decision on its petition, which will be heard in August.

If Torrent wins the race to acquire Reliance Capital, it plans to infuse additional capital into the two insurance companies. Interestingly, the Piramal group and private equity firm TPG plan to sell their 30 per cent stake in Shriram General Insurance at a valuation of $2 billion (Rs 16,400 crore) for the entire company.

In comparison, Reliance Capital holds 51 per cent stake in Reliance Nippon Life Insurance and 100 per cent in Reliance General Insurance. As both insurers are profit making, lenders expect better valuation for Reliance Capital.

The Hindujas have told lenders they will retain their earlier bid of Rs 9,000 crore of upfront cash and participate in the auction.

Reliance Capital was sent for debt resolution under the Insolvency and Bankruptcy Code 2016 in November 2021 for defaulting to debt worth Rs 24,000 crore.

RESOLUTION DELAYED

• Lenders fix Rs 9,000 crore as floor price
• It can be raised by Rs 500 crore in the second round and by Rs 250 crore in the next
• Bidders have to give Rs 8,000 crore as upfront cash with their offers
• Hindujas offers to retain its earlier bid of Rs 9,000 crore of upfront cash and participate in the auction
• Participation of Torrent, which offered Rs 8,650 crore in the first round, is subject to SC decision
• Oakteee may also join the race