Reliance Capital lenders plan round 2 of auction
2 min read 09 Jan 2023, 12:29 AM ISTCommittee of lenders to vote on proposal for new auction round todayOnly four investors—Hindujas, Torrent, Cosmea-Piramal consortium and Oaktree Capital—submitted final bids in December
PremiumMUMBAI : The bidding for Reliance Capital took an unexpected twist, with the committee of creditors (CoC) considering a second round of e-auction as the bidders tried to top each other’s bids after the completion of the auction, two officials aware of the matter said.
CoC will meet on Monday to vote on the proposal to organize a second round of auction. The lenders have set a reserve price of ₹9,500 crore, including upfront cash of ₹8,000 crore, in the second round of the auction.
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If the proposal is approved, Hinduja, Piramal, Torrent and Oaktree may get a fresh chance to revise their bids for Reliance Capital.
The proposal to look at a second auction was taken by the lenders after the Ahmedabad-based Torrent Group offered the entire bid amount of ₹8,640 crore as upfront cash on Friday.
Torrent’s proposal to raise its bid came after the financial advisers differed over the net present value of the bankrupt company’s assets.
“Hinduja Group has written to the lenders complaining against Torrent’s revised bid, and Torrent is complaining against the former’s plan. The bidders have been making multiple changes to the bids since the auction started. CoC thought instead of being trapped in legal issues, let us go for a fresh round so that there is no further complication," a lender, one of the two people cited above, said on the condition of anonymity.
The auction process for Reliance Capital has been marked by several twists and turns, with bidders trying to outdo each other and initial frontrunners—Oaktree and Cosmea-Piramal consortium withdrawing from the race.
The first round of the auction, which concluded on 21 December, saw Torrent submitting the highest bid of ₹8,640 crore followed by Hinduja Group offering ₹8,110 crore.
A day after the e-auction, Hindujas revised their bid to ₹9,000 crore from ₹8,110 crore.
The Hindujas, who had come in second during the auction process, offered an upfront cash of ₹8,800 crore.
Challenging this move, the Torrent group approached the National Company Law Tribunal, which asked the lenders to keep the Hinduja group’s post-auction offer on hold till the final hearing.
Even after submitting the revised bids, Torrent and Hinduja Group’s bids are far below the liquidation value fixed by the independent valuers.
According to estimates submitted by valuers, Duff and Phelps arrived at a liquidation value of ₹12,500 crore, while RBSA pegged it at ₹13,200 crore.
In February last year, the administrator invited expressions of interest for the sale of the stressed non-bank lender.
Among the 55 companies that had submitted their expressions of interest in February, 14 submitted non-binding bids by the end of August last year.
Finally, only four investors—Hindujas, Torrent, Cosmea-Piramal consortium and Oaktree Capital—submitted final bids in December.
Since the bids submitted were below the liquidation value, the committee of creditors held an e-auction in which bidders were asked to revise their bid prices.
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