NEW DELHI: With an aim to maximise the value realised from the corporate insolvency resolution process of Reliance Capital, the Committee of Creditors (COC) has decided to run a second round of Challenge Mechanism (e-auction) for the bidders – Hinduja group and Torrent Group.
The CoC is now eyeing an amount upwards of R10,000 crore from the proposed second auction, sources told TNIE. The second round (based on Challenge Mechanism) is likely to be held around January 20, 2023. The first round of auction saw both – Hindujas and Torrent trying to outbid each other by revising their bids and offering more upfront cash, even after the auction got over.
The second round of the auction will be conducted with a reserve price of R9,500 crore. The participants will have to increase the bid amount by minimum R500 crore in the first round. That means the minimum bid amount in the round-1 has to be R10,000 crore. In the following rounds, bidders will have to increase the bid amount by minimum R250 crore each. The second round will also have the minimum upfront cash threshold of R8,000 crore for the bidders.
In its revised bid, the Torrent Group had already made an all-cash offer of R8,640 crore, while Hinduja Group had offered to pay R8,800 crore in its revised bid. However, the Mumbai bench of the NCLT has asked the CoC to not consider Hinduja Group’s revised bid.
What is more interesting is the fact that the second round of auction will be open for all the four bidders – Torrent Group, Hinduja Group, Cosmea-Piramal, and Oaktree. Sources said that all these bidders have a valid Earnest Money Deposit (EMD), and were eligible participants for the previous round of auction too.
According to sources, the decision to have another round of auction has been taken as the commercial viability of the Torrent and Hinduja bids is not acceptable to the CoC.
The bids submitted by Torrent and Hinduja are far below the liquidation value and fair value fixed by the independent valuers. The Liquidation Value of Reliance Capital is pegged at around R13,000 crore and Fair Value is R17,000 crore.