Hinduja sole bidder for Reliance Capital with ₹9,650 cr offer - The Economic Times

Hinduja Group entity IndusInd International Holdings was the sole bidder for Reliance Capital at the auction held on Wednesday as part of bankruptcy proceedings, said two people aware of the development. It submitted a ₹9,650 crore upfront cash offer, they said.

Torrent Investments and Oaktree Capital didn't submit bids, although they had indicated earlier that they would participate in the process, the people said.

"Torrent participated in the mock auction drill today (Wednesday) and pre-auction discussions but did not submit a bid today," said one of the persons cited above.

Lenders had set ₹9,500 crore as the threshold for participation in the auction, including a minimum ₹8,000 crore as upfront cash.

The Hinduja Group offered ₹9,510 crore in the first round and raised this to ₹9,650 crore in the second round, said the person cited above. Since there were no counteroffers, the auction process ended, the person said. Hinduja's offer equates to a recovery of 41% for lenders.
The Hinduja bid is about Rs 1,000 crore more than what Torrent offered in the first round of auction in December.

Reliance Capital's administrator Nageswara Rao Y and Hinduja group did not respond to ET's queries.

The Anil Ambani-founded financial services company has a cash balance of around Rs 400 crore. Thus, the recovery for lenders would be upwards of Rs 10,000 crore, the people said, although below the liquidation value, based on the latest bid.

Lenders held a second auction because offers in the first round were below the liquidation value of Rs 12,500-13,000 crore.

Prior to the second auction, lenders had conveyed to the contenders that they would negotiate an improved offer only with the highest bidder. The next step will be to seek an improved offer from the Hindujas.

In the first auction held on December 21, Torrent Investments made the highest offer of Rs 8,640 crore, while the Hinduja Group entity offered Rs 8,110 crore. However, within 24 hours, Hinduja made a revised, improved offer of Rs 9,000 crore, a development Torrent contested at the National Company Law Tribunal (NCLT), saying that it violated the sanctity of the auction process as it was made after the deadline.

The NCLT bench ruled in favour of Torrent, barring lenders from holding a second auction. However, the appellate authority overturned the tribunal order. In mid-April, the Supreme Court directed lenders to hold a challenge-mechanism auction, but also said it would again hear the matter in August.

Life Insurance Corporation of India (LIC) had previously indicated it would only vote for plans above the liquidation value. Much will therefore depend on the view that LIC, Employees' Provident Fund Organisation (FPFO) and JC Flowers ARC - the three largest debt holders - take on the Hinduja offer. JC Flowers ARC had acquired Reliance Capital's debt from Yes Bank.

The administrator has admitted verified claims of Rs 23,666 crore from financial creditors. The central bank superseded the board of Reliance Capital on November 30 last year, citing governance concerns. Reliance Capital is a core investment company with 20 units in its fold, including insurance, broking and asset reconstruction.

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Hinduja sole bidder for Reliance Capital with ₹9,650 cr offer - The Economic Times
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