NARCL is competing with a consortium of alternative investment funds Verde Partners And Arena Investors LP, and Mumbai-based Authum Investments will acquire the debt-laden NBFC, which owes ₹32,750 crore to lenders. Bankers said NARCL’s bid raises several questions and raises doubts whether the government-backed bad loan aggregator has the capacity to take on such a huge loan.
“Perhaps NARCL feels it can better manage this complex resolution but how does it have the wherewithal to run it? It will also require a large capital investment for which NARCL will approach the banks that are its shareholders. So, probably a lot more mind and thought will have to be put on it,” said a senior banking official.
Bankers said the fact that NARCL would release 85% Security receipts (SRs) and cash only 15% also brings uncertainty to the process.
“All other ARCs offer an all-cash deal. This relaxation has been given only to NARCL. Though the SRs are guaranteed by the government, there is still uncertainty about how and when they will be encashed. Is it worth it? risk In such a big account?” asked another bank official.
Sources said the details are not yet known, but all three bids are in the range of Rs 4,000 crore to Rs 4,500 crore. This means a recovery of between 12% and 14% for creditors. The bids also included certain cash upfronts and non-convertible debentures, to be paid over the next few years. Bankers are expecting a better offer from the bidders.
Some bankers are upset that NARCL is going beyond its specified mandate and taking over a company. Allegations of misgovernance in the Srei group also make it a difficult decision to understand, his bankers said. Although to be sure, there is nothing that prevents NARCL from doing so. New norms issued in October allow ARCs to bid for companies bankruptcy and the Bankruptcy Code, 2016 (IBC), subject to conditions including a minimum Net Owned Funds (NoF) of ₹1,000 crore. NARCL with ARCIL and edelweiss There are only three ARCs that make the cut by this matrix.
“NARCL’s view is that it has the capability to take on this complex NBFC business,” said a person familiar with NARCL’s thinking. Apart from this, banks will also get better value from his presence in the auction. NARCL CEO N Sundar did not respond to an email seeking comment.
A third banking official familiar with the company’s plans said that NARCL has written to finance The ministry is seeking permission to bid for the property through the IBC framework but no response has been received so far. The third executive said, “They have gone ahead and made a bid anyway, but there are many questions as to why they did it.”