As the deadline for the submission of binding bids approaches, the bidders of Reliance Capital, including Hinduja, Torrent, Zurich, and Piramal have flagged off various legal issues to the lenders and Administrator, involving Reliance Capital and its subsidiaries.
These legal issues involve a cumulative liability of Rs 22,000 crore, and they need quick resolution for the successful closure of RCAP’s resolution plan.
According to sources, the bidders are likely to make a condition precedent of these issues to any payment to the lenders.
The two big issues flagged off by the bidders are the impending resolution of Reliance Home Finance Ltd (RHFL) and the legal battle between the Administrator and IDBI Trusteeship for the control of Reliance General Insurance’s shares, which is pending in the NCLT.
Authum Investment and Infrastructure Ltd had been selected as the successful bidder for RHFL in June 2021, but the resolution process has not yet been completed due to various litigation involving the debenture holders. The total debt of RHFL is Rs 11,500 crore.
As far as Reliance General Insurance is concerned, the Independent actuarial Tower Watson has valued this business at Rs 9,500 crore.
Apart from these, the two other legal cases flagged off by the bidders are Axis Bank’s claim of Rs 150 crore against Reliance Capital, which the bank has lost in the NCLT, and a case involving Administrator and IndusInd Bank, involving arbitration of Nippon Asset Management shares. The total liability in this matter is Rs 650 crore.
The last date for submitting binding bids is November 28.
The quick resolution of these legal matters is a challenge for the Administrator for the successful closure of the RCAP resolution plan.
Reliance Capital had received 14 non-binding bids for its multiple businesses. Six companies had submitted bids for the entire company, while the rest of the bidders had submitted bids for its multiple subsidiaries.
Torrent, IndusInd, Oaktree, Cosmea Financial, Authum Investment, and B Right Real Estate have submitted bids in the range of Rs 4,000 crore to Rs 4,500 crore for Reliance Capital’s entire assets.
For Reliance General Insurance business, Piramal Finance has bid Rs 3,600 crore, while Zurich Insurance’s bid is Rs 3,700 crore.
The third bidder, Advent, has bid Rs 7,000 crore for Reliance General Insurance.
Jindal Steel and Power and UVARC have submitted bids for Reliance Capital’s ARC business.
For other assorted assets of Reliance Capital, 3 bidders — Choice Equity, Global Fincap, and Grand Bhawan — have submitted the bids.
RCAP’s life insurance business, RNLIC, had not received any bid, but later on Aditya Birla Capital and Nippon Life Insurance, which is already holding 49 per cent equity in RNLIC, have evinced interest in acquiring RCAP’s 51 per cent stake in this business.
At the beginning of the resolution process of Reliance Capital over 54 companies had submitted Expression of Interest (EOI) for its various assets, out of which only 14 are now in the fray.