The Reliance Capital Administrator, in the COC meeting held on Wednesday presented the valuation reports of the Independent valuers – Duff & Phelps and RBSA, to the lenders.
According to sources, Independent valuers Duff & Phelps and RBSA have given a Liquidation Value of Rs 13,000 crore for Reliance Capital.
In comparison, four bidders have quoted merely 30 per cent of the Liquidation Value, making it imminent for Reliance Capital to be referred for liquidation.
As per the valuation report by Duff and Phelps, the Liquidation Value of Reliance Capital is estimated at Rs 12,500 crore, while the Liquidation Value arrived at by RBSA is Rs 13,200 crore.
In comparison, the highest bid value received by the lenders of Reliance Capital is Rs 5,231 crore from the consortium of Cosmea Financial and Piramal Group.
Hinduja, with a bid value of Rs 5,060 crore is the second highest bidder for RCAP. The size of Torrent and Oaktree bids is Rs 4,500 crore and Rs 4,200 crore, respectively.
Hence, the bids received by the RCAP lenders are almost 30 per cent of the liquidation value fixed by the two Independent valuers.
The low bid value compared to the liquidation value fixed by the independent valuers makes it imminent for the company to be referred for liquidation.
In addition to the RCAP CIC, both the independent valuers have assigned a liquidation value to RCAP’s Life and General Insurance businesses, too.
According to Duff and Phelps’ valuation report, the Liquidation Value of Reliance General Insurance is Rs 7,000 crore, and Reliance Life Insurance business is Rs 4,000 crore.
On the other hand, RBSA has given a liquidation value of Rs 7,500 crore and Rs 4,300 crore for Reliance General Insurance and Reliance Life Insurance, respectively.
The RCAP lenders have not received any bids for these two businesses (General and Life Insurance) of the company, which account for over 90 per cent of the total valuation.
The lenders have received three bids for the rest of the businesses/clusters like Securities, Real Estate, ARC, etc. of Reliance Capital.
The combined bid value of these businesses is Rs 120 crore, but as per the valuation reports of Duff & Phelps and RBSA, the Liquidation Value of these businesses is estimated at Rs 280 crore and Rs 240 crore, respectively.
Keeping in mind the huge gap between the LV and the actual bid values, the COC has decided to reject all the bids and is considering the liquidation of Reliance Capital and its subsidiaries, under Regulation 6(A) of the IBC Code. Introduced in September this year, section 6(A) of the IBC allows the COC to liquidate the multiple businesses of Reliance Capital separately.