Bidding for Reliance Capital ends tomorrow amid concerns of investors

The due date for submitting bids for debt-laden Reliance Capital is likely to end on Monday. Despite giving extensions in deadlines numerous times, there has been a very tepid response from investors for Reliance Capital and its subsidiaries. Investors seem to be cautious in bidding for Reliance Capital amid concerns over its most valuable arm Reliance General Insurance Company. Currently, the completion of the corporate insolvency resolution process of the company is extended till November 1, 2022.

It is known that the administrator handling the CIRP of Reliance Capital, wanted to include Reliance General Insurance in the insolvency process. However, DBI Trusteeship Services who is acting as the debenture trustee on behalf of Credit Suisse, have rejected to release the shares of the general insurance firm under the IBC.

On behalf of Credit Suisse, IDBI Trusteeship Services invoked the pledge of Reliance Capital's 100% in Reliance General in November 2019.

Sources told PTI that the Administrator wants to include Reliance General as part of RCL's insolvency process, but the IDBI Trustee has refused to release the shares of the general insurance firm for the resolution process under the Insolvency and Bankruptcy Code (IBC). They added, "this seems to have hit a roadblock."

As per the sources, investors are cagey about the submission of bids in the absence of clarity over Reliance General shares.

In regards to Reliance Commercial Finance (RCF), and Reliance Home Finance (RHF), the sources said that they had gone through a separate resolution process with Authum Investment and Infrastructure much before RCL was referred to NCLT.

Reliance Capital has a consolidated debt of about Rs40,000 crore. RBI had applied to initiate CIRP against the Reliance Group company at the National Company Law Tribunal (NCLT) Mumbai bench.

Subsidiaries of Reliance Capital that are pushed for insolvency resolution are - Reliance General Insurance, Reliance Nippon Life Insurance, Reliance Securities, Reliance Asset Reconstruction Company, Reliance Home Finance, and Reliance Commercial Finance.

RBI-appointed Nageswara Rao Y is the administrator of Reliance Capital insolvency process.

For reducing the concerns of the bidders regarding the RCF and RHF, sources revealed that both the entities will be held in a separate Trust for the Authum Investment and Infrastructure's resolution.

Further, the sources said that the Committee of Creditors (CoC) and Administrator are keen on receiving bids under Option-1.

Earlier, the lenders had given only two options to the bidders. Firstly, bidders were allowed to acquire Reliance Capital along with its eight subsidiaries. Reliance Capital will become the Core Investment Company here.

Secondly, bidders can also submit resolution plans even for a single subsidiary.

The CoC has extended the deadline for submitting bids for Reliance Capital and subsidiaries by five times. However, only very few entities have shown interest in the Anil Ambani-backed companies. Some of them are Piramal Enterprises, Yes Bank, Torrent Group, and IndusInd Bank among others.

On Friday, Reliance Capital in its regulatory filing said, "the Hon'ble NCLT Mumbai.... extended the timeline for completion of CIRP by a period of 60 days i.e., till November 1, 2022."

Last week, on BSE, Reliance Capital shares closed at ₹14.64 apiece up by 4.95%.