Indicating a lukewarm response for Reliance Capital (RCap) businesses, four companies – IndusInd, Torrent, Oaktree Capital Management, and B-Right Realestate – have made financial offers for RCap as a whole, with all offers around Rs 4,000 crore, reporting huge haircuts for banks if approved by a board of lenders.
Piramal Enterprises, Zurich Insurance, and Advent International have submitted bids for Reliance General Insurance, while there were no buyers for the life insurance business, bank sources said.
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Jindal Steel & Power and UV Asset Reconstruction Company (ARC), owned by Naveen Jindal, have submitted bids for RCap’s ARC business.
For RCap’s other miscellaneous businesses, three bidders – Choice Equity, Global Fincap and Grand Bhawan – submitted their bids.
Several lenders, including India’s Life Insurance Corporation (LIC), claimed a total of Rs 25,333 crore against RCap after the company was sent for debt settlement under the 2016 Insolvency and Bankruptcy Code .
Fifty-four companies responded with expressions of interest (EOI) for the company and its businesses, but the nature and number of bids reflected the low bidders response to RCap’s businesses, the bankers said.
Two subsidiaries of RCap – domestic finance companies and non-bank finance companies – have an additional debt of Rs 25,000 crore on their books. The lenders have decided to place the capital of Reliance Commercial Finance and Reliance Home Finance – the subsidiaries of RCap – in a separate fund. This is done so that potential bidders don’t have to deal with these entities. The proposed trust structure will ensure that parent company’s bidders do not face additional debt.
The RCap resolution has been fraught with regulatory hurdles since the beginning of the process. The prerequisite of forming a consortium of different bidders for RCap’s multiple business lines and the condition of bidding entirely in cash have alienated most bidders.
LIC tried to sell its exposure to bonds worth Rs 3,400 crore issued by RCap, but found no buyers among the ARCs. This occurs at a time when the deadline for submitting Expressions of Interest has expired. The bonds are trading at a 70% discount and LIC has again solicited offers for the loan.
Despite the lackluster response, lenders hope to be able to settle the combined debt of RCap and its subsidiaries worth Rs 50,333 crore by the end of the current financial year (2022-23).
RCap was sent for debt settlement by the Reserve Bank of India in November last year after the company, previously owned by Anil Ambani, defaulted on its loans.