Reliance Capital lenders finalise e-auction plan for bidders

The Reliance Capital’s Committee of Creditors (COC) met on Friday and finalised the process and rules for conducting an e-auction for the bidders.

The e-auction will begin on December 19, and will be an ascending auction process.

The bid price of Rs 5,300 crore quoted by the Cosmea-Piramal consortium will be the base price for the planned auction, and in the round one, the bidders will have to bid Rs 1,000 crore more than this base value of Rs 5,300 crore.

In the second round, the bid value should go up by minimum Rs 750 crore, while in the third and fourth rounds, the bidder will have to increase the bid price minimum by Rs 500 crore and Rs 250 crore, respectively.

This is likely to be a two-day auction process.

This is the first time that an e-auction of this scale and magnitude will take place for a resolution under the IBC.

The decision in favour of ascending e-auction has been taken at the behest of the LIC and the EPFO, who control 35 per cent of the voting rights in the COC. Both the lenders have voted against the liquidation and descending e-auction proposals.

The COC did not take any decision on the Reliance General Insurance’s demand for Rs 600 crore capital infusion for Reliance Capital.

Reliance Capital had received 4 binding bids at the company level. The highest bid of Rs 5,231 crore was submitted by a consortium of Cosmea Financial and Piramal.

Hinduja, with a bid value of Rs 5,060 crore, was the second-highest bidder for RCAP. The bid size of the other two bidders, Torrent and Oaktree, is Rs 4,500 crore and Rs 4,200 crore, respectively.

In the Cosmea-Piramal bid, the liability of Piramal is limited to Reliance General Insurance only.

On the other hand, the valuation reports by the Independent valuers – Duff & Phelps and RBSA, have pegged the liquidation value of Reliance Capital at Rs 12,500 crore and Rs 13,200 crore, respectively.

The liquidation value of Reliance Capital is almost 70 per cent higher than the value of the bids received.

According to Duff and Phelps, the liquidation value of Reliance General Insurance is Rs 7,000 crore, and Reliance Nippon Life Insurance business is Rs 4,000 crore.

The RBSA has pegged the liquidation value of Reliance General Insurance and Reliance Life Insurance at Rs 7,500 crore and Rs 4,300 crore, respectively, though no separate bids have come for the two insurance arms of Reliance Capital.

20221209-183005

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