RCap e-auction to be held from December 19; Base bid at Rs 5,231 crore

Lenders of Reliance Capital will hold e-auction of the company from December 19 to December 22. There will be multiple rounds of bidding until the highest bidder will be identified. As per the reports, the highest offer of Rs 5,231 crore from Piramal Enterprises-Cosmea Financial Holdings team for Reliance Capital and its units will be the base bid for the e-auction.

In the first round of bidding, bidders must offer at least ₹1,000 crore more than the base price to remain in the fight. In second round, the bidders have to improve their offers by ₹750 crore over the highest offer received in the first round. In the third round, the bidders must offer at least ₹500 crore over the highest bid received in the second round.

As per Duff & Phelps and RBSA, the two valuers associated with the insolvency, have pegged the liquidation value in the range of ₹12,500-13,000 crore. Therefore, the lenders are disappointed as the highest offer received for Reliance Capital and its units was 60% below the aggregate liquidation value.

In the bidding process, UV ARC proposed to act as a collection agent, whereby it would retain as a recovery fee 5% of the amount recovered from selling assets of Reliance Capital. UV ARC estimated cash recoveries between ₹11,000 crore and ₹15,000 crore.

The RBI has superseded the board of RCap last year in November citing various governance concerns. The company is a core investment firm with 20 units under its fold, including insurance, broking and asset reconstruction.