Reliance Capital lenders to hold fresh auction

9 Jan 2023 , 11:54 AM

According to sources, Reliance Capital’s lenders have proposed holding a new auction next week with a minimum bid threshold of Rs9,500 crore for the Anil Ambani-founded financial services firm that is undergoing bankruptcy resolution.

The decision was made late Friday night during a meeting of the committee of creditors (CoC) to review offers from the Hinduja Group and Torrent Investments.

As per the sources, lenders set a net present value (NPV) threshold price of Rs9,500 crore, which includes a minimum upfront cash payment of Rs8,000 crore. This follows a dispute over the Hinduja Group bid, which arrived after the last auction deadline and was higher than the top offer made by Torrent Investments within the time limit.

According to the people cited above, bidders in the new auction will have to increase their offers by a minimum of Rs500 crore in the first round and Rs250 crore in the second round.

So far, all offers for Reliance Capital have been less than the Rs12,500-13,000 crore liquidation value.

On an NPV basis, the previous auction set the minimum threshold price at Rs6,500 crore. Torrent was the highest bidder, offering Rs8,640 crore on an NPV basis, which was calculated after discounting future cash flows. 

The Hinduja Group entity made a revised, improved offer of Rs9,000 crore, including an upfront payment of Rs8,750 crore, a day after the auction, after both bidders had submitted detailed resolution plans to the administrator. Torrent had offered an upfront payment of Rs3,750 crore at the time (December 22), with the remainder payable over a few years.

Torrent Investments protested revised Hinduja offer to administrator and filed with NCLT to stop presentation to lenders for violating auction terms.

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