Hinduja Group ahead in the race to acquire Reliance Capital
Hinduja Group is ahead in the race to acquire Reliance Capital after it revised the bid price to Rs 9,500 crores of which Rs 8,800 crore would be paid upfront. The group has earlier bid Rs 8,110 crore in the auction that was held on 21 December 2022.
Sources say a high component of the upfront payment (Rs 8,800 crore) may swing the balance in Hinduja’s favour once the lenders meet to take a call on the two final offers.
It has been learnt that lenders led by LIC and EPFO with 35% voting are ‘overwhelmingly’ in support of an ‘all upfront cash’ bid of the Hinduja group.
Torrent Group, which is the other bidder left in the fray, is offering a 60% lower cash of Rs 4,000 crore in its total bid of Rs 8,640 crores. The rest 55% of the bid price is being offered at zero interest to the lenders of Reliance Capital as deferred payment to be paid in 3 equal instalments in the 3rd, 4th and the 5th year.
The Committee of Creditors (CoC) will take a call on both the plans in their meeting on 26 December 2022, where advisors of the Committee of Creditors (CoC) – KPMG — and the RBI appointed Administrator’s advisors Deloitte will present their final analysis.
NCLT deadline for Reliance Capital to file for resolution is 31 January 2023 and the voting process will be spread over 3 to 4 weeks.
RBI’s decision of invoking the special powers under Section 227 of IBC for the resolution of Reliance Capital has turned out to be a huge success for the lenders and is only the second successful resolution after DHFL.
Reliance Capital had received four binding bids on 28 November, which was the last date for submitting the bids. The highest bid of Rs 5,231 crore has been submitted by a consortium of Cosmea Financial and Piramal. Hindujas with Rs 5,060 crore has emerged as the second highest bidder, followed by Torrent Investment (Rs 4500 crore) and Oaktree (Rs 4200 crores).
However, Oaktree and the consortium of Cosmea-Piramal pulled out of the race citing different reasons. The Piraml consortium withdrew from the e-auction as it felt the base price (Rs 6,500 crore) was high and impractical.
Reliance Capital owes its lenders Rs 25,400 crore and the liquidation value of its assets has been arrived at Rs 13,000 crore.
Also read: Cosmea-Piramal consortium pulls out from bidding process for Reliance Capital
