Anil Ambani’s Reliance Capital receives bids 60% below liquidation value; creditors concerned
The highest bid received for the Anil Ambani-owned Reliance Capital, which is undergoing insolvent proceedings, is 60% below aggregate the liquidation value. This means that bidders need to significantly increase the offers, else the company will need to through liquidation or piecemeal sale of assets—a situation that the company’s creditors want to avoid, reported Economic Times.
Lenders of Reliance Capital will hold individual meetings with eight bidders to discuss details of the resolution plans and request the latter to increase the offers made so far, the report added.
Kroll and Druff, the two companies appointed by insolvency administrators to value the company, have estimated the liquidation value in the range of Rs 12,500 to Rs 13,000 crore. The highest bid from Piramal Enterprises–Cosmea Financial Holdings is Rs 5,231 crore, which is 60% lower than the liquidation value.
Other bidders in the fray for Reliance Capital include Hinduja Group, Oaktree Capital, Torrent Investments and UV Asset Reconstruction Company (ARC).
As part of the resolution plan submitted by Piramal-Cosmea, Piramal would acquire Reliance General Company, a subsidiary of Reliance Capital for Rs 3,750 crore, and Cosmea would acquire the remaining units for Rs 1,481 crore. The two companies have offered Rs 4,250 crore upfront and Rs 981 crore at the end of the second year.
Sam Ghosh, founder-promoter of Cosmea Financial Holdings, headed Reliance Capital for almost 9 years until 2017.
The second highest bid came from Hinduja Group, which offered Rs 4100 crore upfront and Rs 320 crore at the end of third, fifth and seventh years.
Torrent Investments offered Rs 4,500 crore, out of which Rs 1100 crore would be an upfront payment, while the remaining Rs 3,400 would be spread over 5 years.
Oaktree Capital’s Rs 4,200 crore offer includes an upfront payment of Rs 1000 crore and Rs 3200 crore over five years.
Reliance Capital’s subsidiaries include Reliance General Insurance, Reliance Nippon Life Insurance, Reliance Securities, Reliance Asset Reconstruction Company, Reliance Home Finance and Reliance Commercial Finance.
In November last year, the Reserve Bank of India superseded the board of the default-hit Reliance Capital and appointed Nageswara Rao Y as the administrator in relation to the Corporate Insolvency Resolution Process (CIRP) of the company.
RBI subsequently filed an application for initiation of CIRP against the company at the Mumbai bench of the National Company Law Tribunal (NCLT).
Earlier in February this year, the RBI-appointed administrator invited expressions of interest (EoIs) for the auction.
In September, RCL in its annual general meeting (AGM) informed shareholders that the company’s consolidated debt stood at Rs 40,000 crore. It also reported a narrowing of its consolidated net loss to Rs 1,759 crore in the December 2021-ended quarter.
The company had posted a net loss of Rs 3,966 crore in the same quarter a year ago. However, losses widened from Rs 1,156 crore in the preceding September quarter. The total income of the company stood at Rs 4,083 crore in Q3FY22, down from Rs 4,890 crore in Q3FY21.
RCL was incorporated on March 5, 1986 and is registered as a Non-Banking Financial Company Core Investment Company (CIC)-Non-Deposit Taking Systemically Important (NBFC-CIC-ND-SI) under the Reserve Bank of India Act, 1934.
