Hinduja group, Torrent, Piramal, Oaktree, bid for Reliance Capital

No takers for life and general insurance businesses of the bankrupt company, say sources

Ahmedabad-based Torrent, Piramal-Cosmea Financial Holdings, American financial services major Oaktree Capital Management, and Hinduja group have submitted binding bids for bankrupt Reliance Capital as the deadline for final offers expired on Monday.

No separate bid was received for Reliance Capital’s life insurance and general insurance ventures, according to banking sources. In the Piramal-Cosmea bid, the Piramal group’s liability is limited to Reliance General Insurance and Reliance Health Insurance only, while Cosmea will acquire the rest of the businesses — if it wins the race, the source said.

UV Special Situations Fund, too, made an offer for the entire firm on a fee basis with a rider that it would sell Reliance Capital’s assets and then repay lenders.

Reliance Capital was sent for debt resolution under the Insolvency and Bankruptcy Code in November last year after it defaulted on bank loans worth Rs 24,000 crore. The central bank-appointed administrator is auctioning assets of Reliance Capital in different clusters and as a whole to maximise value for the lenders.

Apart from selling Reliance Capital as a whole, the insolvency administrator had put the bankrupt firm’s 51 per cent stake in Reliance Nippon Life Insurance and 100 per cent in general insurance and other assets on sale and had sought separate bids for each entity.

The offers made by the companies are not known yet, said a banker. The offers would be opened at the next committee of creditors meeting. Banking sources said highest weightage will be given to the upfront cash offers made by the bidders. Lenders want to close the entire transaction before the December quarter and recover proceeds in the current financial year.

Japan’s Nippon Life Corporation, which owns 49 per cent stake in Reliance Nippon Life Insurance, did not make an offer for the life insurance venture separately, but will be okay with Hindujas and Torrent acquiring the company. Aditya Birla group’s Birla Sun Life Insurance backed out of the race after Nippon Life objected to a merger with the Indian firm as it would have diluted Nippon Life stake in the merged entity to around 10 per cent. Birla was planning to merge Birla Sun Life Insurance with Nippon Life Insurance.

The Adani group and Tatas did not participate in the sale though both were among the 55 companies that had submitted their expressions of interest (EoI) in February to bid for the assets. Of the 55 companies, only few submitted non-binding bids by August-end. Banking sources said Torrent wanted to enter the financial services sector by acquiring Reliance Capital. 

Advent, which had made the highest non-binding offer of Rs 7,000 crore for Reliance General Insurance in August, did not participate in the final process as its non-binding offer was double of what Piramal had offered for the general insurance firm.

The spokespersons for Torrent, Piramal, Hinduja groups, and Advent did not comment.

An indication of possible valuation of Reliance Capital was received last when the Swiss Challenge process to sell Life Insurance Corporation’s debt worth Rs 3,400 crore did not get a rival bid, thus paving the way for ACRE SSG, a stressed asset firm, to acquire the debt at a 73 per cent haircut to LIC on its exposure. ACRE’s offer for LIC debt values Reliance Capital as a core investment company at around Rs 4,400 crore.

Final countdown

• Next CoC meeting to open binding bids 
• Top weightage for highest upfront cash offer
• Lenders want to finalise transaction in December quarter
• Bidders interested in profit making insurance ventures