At least five entities including Piramal group, Oaktree Capital, IndusInd Bank, Cosmea Financials and YES Bank may submit their bids to acquire assets belonging to Reliance Capital under the insolvency process. Monday is the last day to submit bids.
Two options
The bidders will submit their final non-binding indicative bids under two options. Under option one, bidders can bid for Reliance Capital as a Core Investment Company (CIC), while the second option gives the bidders freedom to buy RCAP's different business clusters, either individually or in combination.
While lenders are more keen to sell Reliance Capital as a whole, some bidders are interested in only select business such as the insurance unit.
The deadline for the submission of bids has been extended five times in the past by the lenders. The timeline 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 beginning of the resolution process of Reliance Capital over 54 companies had submitted Expression of Interest (EOI) for its various assets, but now there are only a handful of bidders actively engaged with the Administrator.
According to the banking sources, of the 54 EOIs received initially, only 4-5 bidders including Piramal Group and YES Bank are actively engaged in the resolution process of RCap.
EMD waiver
Due to the poor response, the Committee of Creditors (CoC) even waived off the condition of paying ₹ 75-crore Earnest Money Deposit (EMD), in the first submission date.
The bidder’s major concerns have been regarding the treatment of three important business clusters of Reliance Capital –- 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, much before RCAP was referred to NCLT.
On the other hand, the shares of Reliance General Insurance, which is the most valuable asset in the entire business portfolio of RCAP, are held by IDBI Trusteeship on the behalf of Credit Suisse. IDBI Trusteeship has refused to release these shares for the ongoing NCLT led resolution proces.
To allay the concerns of the bidders regarding the RCF and RHF, the CoC has proposed that both the entities will be held in a separate Trust for the Authum Investment and Infrastructure’s resolution.
The combined debt of these two entities - RCF and RHF – is around ₹25,000 crore. The proposed Trust structure would ensure that the bidders of RCAP do not have to deal with this debt. The remaining debt of RCAP is around ₹20,000 crore