Jindal Power in race to buy RCap, Srei in bid to enter financial services

Naveen Jindal-owned Jindal Power has joined the race to acquire Reliance Capital and Srei Infrastructure assets in its bid to diversify into financial services business.

Both Reliance Capital and Srei Infrastructure are undergoing a debt resolution process under the Insolvency and Bankruptcy Code, 2016 after both companies defaulted on bank loans.

Jindal Power was hived off from its listed parent, Jindal Steel and Power last year to the promoter family and has been bidding for various bankrupt entities since. Apart from the non-banking companies, Jindal Power had made a bid for Reliance Naval and Engineering, a Gujarat-based shipyard, but lost the race to Hazel Mercantile.

The diversification of Jindal Power, which has 3,400 mw power generation capacity, into financial services has surprised bankers.

“There are several contenders for Reliance Capital assets and Srei assets and Jindal Power has surprised everyone as it does not have any financial services background,” said a banker. “We have to wait and see whether they make any financial bids,” he said.

In the first half of the fiscal year ending March 2022, the company had made a profit of Rs 98 crore on income of Rs 2,852 crore.

Jindal Power officials were not available for comment.

Jindal Power has sent its expression of interest for all assets of Reliance Capital which includes the insurance arms, a stock broking, home finance and a non-banking finance units. With this Jindal will be competing with 50 other companies which includes some of the world’s biggest financial services companies including Brookfield Private Capital, TPG Asia, Nippon Life Insurance and Zurich Insurance Companies. Local biggies such as Adani Finserve, Tata AIG General Insurance, and Piramal group have also sent in their EoIs. After the due diligence, the prospective buyers will make financial bids.

Meanwhile, a banking source said the lenders committee is likely to seek an additional three months to close the resolution process.

As per the IBC rules, the Administrator appointed by the Reserve Bank of India has to close the resolution of Reliance Capital by June 3 this year. If the court allows the extension, the committee of creditors will have time till September 3, to close the resolution of Reliance Capital.