Reliance Capital base price for e-auction fixed at Rs 5,300 crore
The e-auction for Reliance Capital will be an ascending auction process, with the base bid price will be Rs 5300 crores quoted by the Cosmea-Piramal consortium. In the round one, the bidders will have to bid Rs 1,000 crore more than the base value of Rs 5300 crores.
In the second round, the bid value should go up by minimum Rs 750 crores, while in the third and fourth round the bidder will have to increase the bid price minimum by Rs 500 crore and Rs 250 crore, respectively.
The Reliance Capital’s Committee of Creditors (COC) met on 9 December and finalised the process and rules for conducting an e-auction for the bidders. This auction is likely to be a two-day 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 Life Insurance Corporation (LIC) and EPFO, who control 35% of the voting rights in the CoC. Both the lenders have voted against the liquidation and descending e-auction proposals.
The Committee of Creditors did not take any decision on the Reliance General Insurance’s demand for Rs 600 crore capital infusion for the Reliance Capital.
The corporate debtor had received four binding bids at the company level. The highest bid of Rs 5,231 crores was submitted by a consortium of Cosmea Financial and Piramal. Hinduja, with a bid value of Rs 5060 crores was the second-highest bidder followed by Torrent Group (Rs 4,500 crore) and Oaktree (Rs 4200) 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% higher than the value of the bids received.
According to Duff and Phelps, the liquidation value of Reliance General Insurance is Rs 7000 crores, and Reliance Nippon Life Insurance business is Rs. 4,000 crores.
RBSA has pegged the liquidation value of Reliance General Insurance and Reliance Life Insurance at Rs 7500 crores and Rs 4300 crores respectively.
Though no separate bids have come for the two insurance arms of Reliance Capital.
Also See: Reliance General Insurance urgently seeks Rs 600 crores capital infusion from Reliance Capital
