Banking News

Reliance Capital Auction: Reliance Capital lenders plan auction on April 4


Lenders of Reliance Capital are proposing to hold a challenge mechanism auction on April 4 to sell the financial services companies, said two people aware of the development. The proposal was discussed at a marathon meeting held on Monday among lenders and the administrator Nageswara Rao Y.

The administrator is proposing to hold an auction amidst stiff resistance from Torrent Investments- one of the bidders for the Anil Ambani-promoted finance company undergoing insolvency proceedings.

Hinduja Group entity is the other bidder in the fray for acquiring the Core Investment Company (CIC) which houses 20 finance companies ranging from insurance to broking.

Lenders were encouraged to hold the extended auction partly because Hinduja Group officials informed lenders that they would participate in the extended auction, the people cited above said.

Lenders have proposed to retain Rs 9500 crore as the threshold price which would include Rs 8000 crore as upfront cash.

Hinduja also conveyed to lenders that they would abide by their revised offer of Rs 9000 crore which was made a day after the first auction on December 21. “Hindujas had sought clarification on their Rs 8110 core offer, which was mistaken as them back-tracking from their revised offer,” the same person said.

Torrent Investments gave the highest offer of Rs 8640 crore while Hinduja Group entity offered Rs 8110 crore at the auction on December 21. However, within 24 hours, Hinduja gave a revised, improved offer of Rs 9000 crore- a development that Torrent contested at the National Company Law Tribunal while also questioning the sanctity of the auction process.Lenders proposed holding an extended auction since the offers at the first round were below the liquidation value of Rs 12500-13000 crore. This, however was opposed by Torrent, which won a case to bar lenders from holding an auction at NCLT. However, the appellate authority and Supreme Court overturned the tribunal order. Last week, the apex court directed lenders to hold a challenge mechanism auction but also said it would again hear the matter in August.

Lenders are worried that the recovery for Reliance Capital may fall below the liquidation value with Hinduja in the fray. While Torrent is not keen to participate in the auction process, a consortium of Piramal Enterprises-Cosmea Financial Holdings, and Oaktree Capital have written to the administrator to refund their earnest money deposit of Rs 75 crore since they were opting out of the race for Reliance Capital.


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