Second round of auction for RCAP may see little interest from bidders

The proposed second round of auction for the sale of Reliance Capital under the debt resolution process could turn out to be a damp sqib with little interest from potential bidders.

According to sources, while Torrent may not even place a bid in the auction, the Hindujas may not increase their bid from the previous offer. Interestingly, the lenders to RCap had voted in favour of holding a second round after the Hinduja-backed IIHL had come with a higher offer after the first round of auction ended.

According to the sources, IIHL of the Hinduja Group has told the lenders that it wants to withdraw its revised bid of Rs 9,000 crore and retain the old offer of Rs 8,110 crore made in the first round of auction, held on December 21.

The Committee of Creditors (COC) had set a base price of Rs 9,500 crore to maximise recovery from the RCAP resolution process after IIHL’s revised offer.

In a related development, Cosmea Financial and Piramal, who had submitted binding bids for Reliance Capital in November last year, have written to the administrator seeking refund of their Earnest Money Deposit (EMD) of Rs 75 crore each, as both the companies do not wish to further participate in the ongoing resolution process of RCAP.

If the second round of auction goes without any bids, Reliance Capital is staring at liquidation. RBSA and Duff & Phelps have pegged the liquidation value of Reliance Capital at Rs 13,000 crore, which is far higher than Torrent’s highest bid of Rs 8,640 crore in the first round of auction.

Also read: Lenders says CoC being prevented from price discovery for RCap resolution

According to bankers involved in the process, in Friday’s COC, Torrent suggested conducting a Swiss Challenge auction with their earlier bid of Rs 8,640 crore as the threshold. If lenders agree to this, Torrent will have the first right to match any counter offer from IIHL of Hinduja Group, the source said.



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