Reliance Capital CoC votes 100% in favour of second round of auction
The proposal to conduct a second round of auction in the Reliance Capital corporate insolvency resolution process (CIRP) has been approved with an overwhelming 100% vote by the lenders, led by the Life Insurance Corporation (LIC) and EPFO, who have 35% voting rights.
With the approval of second round of Challenge Mechanism, the earlier bids of Torrent and Hinduja are no longer valid. The schedule for the second Challenge Mechanism is expected to be announced shortly by the Committee of Creditors.
The Reserve Price for the second round Challenge Mechanism is Rs 9500 crores, including a minimum cash offer of Rs 8000 crores. The participants will have to increase the bid amount by minimum Rs. 500 crores in the first round. That means the minimum bid amount in the round-1 has to be Rs. 10,000 crores. In the following rounds, bidders will have to increase the bid amount by minimum Rs. 250 crores each.
According to sources, the decision to run a second round of challenge mechanism has been taken as the commercial viability of the Torrent and Hinduja (IIHL) bids is not acceptable to the COC.
The bids submitted by Torrent and IIHL are far below the liquidation value and fair value fixed by the independent valuers. The Liquidation Value of Reliance Capital is pegged at around Rs 13,000 crores and Fair Value is Rs 17,000 crores.
COC has noted Torrent’s all cash bid of Rs. 8640 crores and IIHL bid of Rs. 8110 crores.
COC also noted an additional cash offer of Rs 900 crores by IIHL, but not part of the NPV, which has only 30% weightage in the overall evaluation.
Both Torrent Group and Hinduja had revised their bid price after the first round of e-auction on 21 December 2022.
Torrent group revised its bid and was offering Rs 8,640 crores as upfront cash. Earlier, the company was offering Rs 3,750 crores as upfront cash and balance in deferred payment.
Hinduja group revised its bid price for Reliance Capital to Rs 9,500 crore on 23rd December 2022, two days after the first round of the e-auction. Hindujas had earlier quoted Rs Rs 8,110 crore in the e-auction. As per Hinduja’s revised bid, they agreed to pay Rs 8,800 crore upfront.
Also read: Now Torrent group revises bid for Reliance Capital
