Bidders for Reliance Capital assets must submit their financial bids by August 29 (Monday), as the deadline for submitting bids ends tomorrow.
Bidders will submit their final non-binding indicative offers under two options. Under Option 1, bidders can bid for Reliance Capital as lead investment company (CIC), while Option 2 gives bidders the freedom to purchase RCAP’s various business lines either individually, either in combination.
Although, lenders are more keen to sell Reliance Capital as a corporation (CIC) than sole proprietorships.
The deadline for submitting offers has been extended five times in the past by lenders.
The deadline for the completion of Reliance Capital’s resolution process has also been extended twice by the lenders. Now, the final deadline to complete the process is November 1, 2022.
At the start of Reliance Capital’s resolution process, more than 54 companies submitted expressions of interest (EOIs) for its various assets, but there are now only a handful of bidders actively engaged with the administrator.
According to banking sources, of the 54 expressions of interest received initially, only four to five bidders, including Piramal Group and Yes Bank, are currently actively engaged in Reliance Capital’s resolution process.
Due to the poor response, the Committee of Creditors (COC) even waived the condition to pay Rs. 75 cr. Deposit of deposit (EMD), at the first date of submission.
The main concerns of bidders related to the treatment of three important business lines of Reliance Capital, namely Reliance Commercial Finance (RCF), Reliance Home Finance (RHF) and Reliance General Insurance Company (RGIC).
Both RCF and RHF had gone through a separate resolution process with Authum Investment and Infrastructure, long before RCAP was referred to NCLT.
On the other hand, the shares of Reliance General Insurance, which is the most valuable asset in RCAP’s entire business portfolio, are held by IDBI Trusteeship on behalf of Credit Suisse. IDBI Trusteeship declined to release these shares for the ongoing resolution process led by NCLT.
To allay bidders’ concerns about the RCF and RHF, the COC proposed that the two entities be held in a separate trust for the resolution of Authum Investment and Infrastructure.
The combined debt of these two entities – RCF and RHF is around Rs. 25,000 cr. The proposed trust structure would ensure that RCAP bidders do not have to incur this debt. RCAP’s debt is around Rs. 20,000 cr.
The trust structure would ensure that out of the Rs 45,000 crore debt, the Rs 25,000 crore debt of RCF and RHF is excluded from this resolution process.
Regarding the shares of RGIC, there has been a standoff between the lenders and IDBI Trusteeship.
IDBI Trusteeship Services Limited, acting in its capacity as trustee of the debentures on behalf of Credit Suisse, had invoked the pledge of RCAP’s 100% interest in RGICL in November 2019 and transferred the shares to its account.
RGICL is RCAP’s most valuable asset and the administrator wants to include it as part of the IBC process and RCAP’s debt resolution, but with the IDBI trustee refusing to release RCIC’s shares, the process appears to have encountered an obstacle.
According to bankers involved in the process, the value of Reliance General Insurance business is estimated to be around Rs 5,000 crore to 6,000 crore.
Bidders have raised questions and concerns about how they can submit bids for Reliance General Insurance if the company’s shares are held by IDBI Trusteeship, which declined to release them for inclusion in the ongoing IBC process.
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