Reliance Cap lenders to meet on Friday to take call on Hinduja Group bid

Lenders of debt ridden Reliance Capital (RCap) will meet on Friday to take a call on Hinduja Group firm's bid to acquire the financial services firm.

IndusInd International Holdings Ltd (IIHL), a Hinduja Group firm, emerged as the highest bidder with an offer of Rs 9,650 crore in the second round of bidding concluded on Wednesday.

IIHL is slated to make a presentation to the lenders on its resolution plan on Friday, sources said.

IIHL was the sole bidder in the second round of auction of Reliance Capital, as Torrent Investments and Oaktree decided not to participate in the auction.

In addition to the Rs 9,650 crore bid, the IIHL has also offered Rs 300 crore capital infusion into Reliance General Insurance, and another Rs 50 crore for the items excluded under section 66 of the Insolvency and Bankruptcy Code, 2016 (IBC).

This takes the total value of IIHL's bid to Rs 10,000 crore and it has expressed intent to pay entire bid amount upfront.

The total value of IIHL's bid is around Rs 1,900 crore more than its own bid of Rs 8,110 crore in the first Challenge Mechanism held in December 2022.

However, their bid was lower than Torrent Investments' bid of Rs 8,640 crore in the first challenge mechanism.

According to sources, any decision on the resolution of Reliance Capital by the Committee of Creditors (CoC) will be subject to the outcome of the Supreme Court's judgement in the appeal filed by Torrent Investments.

The resolution process of Reliance Capital was mired into litigation after the first round of auction.

Following the closure of first round, the Hinduja Group firm submitted the bid post auction date.

IIHL offered an all-cash revised bid of Rs 9,000 crore after the completion of the auction as against an offer of Rs 8,110 crore in December. This was done even though lenders had expressed their intent to hold the second round of auction.

This post-auction bid is being contested by Torrent Investments in the Supreme Court as it was the highest bidder in the first round of auction.

Torrent challenged IIHL's revised bid and the lenders' decision to conduct second round of auction in NCLT Mumbai. The NCLT ruled in favour of Torrent and the lenders of Reliance Capital challenged the order in NCLAT.

NCLAT ruled in favour of the lenders and allowed them to go for a second round of auction to maximise their recovery from the sale of Reliance Capital.

Torrent challenged the NCLAT order in the Supreme Court, which refused to stay the NCLAT order and allowed the lenders to go ahead with the second round of auction.

Meanwhile, the Mumbai-bench of National Company Law Tribunal (NCLT) has extended the deadline for completing the resolution process of RCap by three months to July 16.

The Reserve Bank of India (RBI) on November 29, 2021, superseded the board of Reliance Capital in view of payment defaults and serious governance issues.

The RBI appointed Nageswara Rao Y as the administrator in relation to the Corporate Insolvency Resolution Process (CIRP) of the firm.

Reliance Capital is the third large non-banking financial company (NBFC) against which the central bank has initiated bankruptcy proceedings under IBC. The other two were Srei Group NBFC and Dewan Housing Finance Corporation (DHFL).

The central bank subsequently filed an application for initiation of CIRP against the company at the Mumbai bench of NCLT.

In February last year, the RBI-appointed administrator invited expressions of interest for the sale of Reliance Capital.