There will be several rounds of bidding among the resolution applicants until the highest bidder is identified. Highest offer of ₹5,231 crore Piramal For Enterprises-Cosmia Financial Holdings Team Reliance The people quoted above said that the capital and its units would be the base bid for the e-auction.
Hinduja Group, Gush Investments and Oaktree Capital are among the other bidders who have offered to acquire Reliance Capital and all its entities.
In the first round, bidders will have to offer at least ₹1,000 crore more than the base price to stay in the fray, the people said. In the second round, bidders will have to improve their offers by ₹750 crore as compared to the highest offer received in the first round. In the third round, bidders will have to offer at least ₹500 crore more than the highest bid received in the second round. Resolution applicants will be invited to participate in the bidding process to be held from December 19 to December 22.
Lenders on Tuesday discussed two options – inviting closed bids or holding an e-auction among resolution applicants. One of the lenders said it was decided that the auction process would help narrow the wide gap between the liquidation price and the highest offer.
desperate lender
The highest offer received for Reliance Capital and its units was 60% less than the total liquidation value, which disappointed lenders. The people said they are not in favor of liquidation or piecemeal sale of assets, as doing so may not yield the best value for the company.
Duff & Phelps and RBSA, two of the insolvency-affiliated valuers, put the liquidation value in the range of Rs 12,500-13,000 crore, the people said.
The ₹5,231-crore Piramal-Cosmia offer involves the acquisition of Reliance General Insurance Company, a wholly owned subsidiary of Reliance Capital, by Piramal for ₹3,750 crore. cosmia Will buy the remaining units for ₹ 1,481 crore.
Both have offered ₹4,250 crore upfront and ₹981 crore at the end of the second year. Sam Ghosh, the founder-promoter of Cosmea Financial Holdings, led Reliance Capital for nearly nine years till 2017. Hinduja The group offered ₹5,060 crore, of which ₹4,100 crore was upfront payment and ₹320 crore at the end of the third, fifth and seventh years. Torrent Investments offered ₹4,500 crore, of which ₹1,100 crore is upfront and ₹3,400 crore over five years. Oaktree Capital made an offer of ₹4,200 crore, including ₹1,000 crore upfront and ₹3,200 crore tenor over five years.
UV ARC proposed to act as a collection agent whereby it would retain 5% of the amount recovered from selling Reliance Capital’s assets as a collection fee. UV ARC estimates cash realization between ₹11,000 crore and ₹15,000 crore. However, lenders are willing to consider bids that include higher cash upfront offers, as those cited above said. The administrator has accepted verified claims of ₹23,666 crore from financial creditors. Life Insurance Corporation of India has the greatest exposure, followed by yes bank,
The RBI had superseded the board of Reliance Capital on November 30 last year, citing governance concerns. It is a core investment company with 20 units, including insurance, broking and asset reconstruction.