Reliance Cap lenders to ask bidders to make all cash bids, form consortium

An industry source says the Administrator appointed by RBI was not supporting all cash bids but CoC insisted on all cash offers from bidders

The Committee of Creditors (CoC) of Reliance Capital, a former Anil Ambani group company, has decided to make changes in the bidding process by inviting all cash bids for the company and has asked bidders of the profit making subsidiaries of Reliance Capital to form a consortium amongst themselves to bid for the company.

As per an industry source, the Administrator appointed by the Reserve Bank of India was not supporting all cash bids but the CoC insisted on all cash offers from the bidders. The CoC will meet again on Wednesday to take a final call on the Request for Resolution Plan (RFRP) document – which was to be issued by April 5. The RFRP document was delayed due to the differences between the CoC and Administrator over the bids process under Option two.

As part of the process, the administrator had invited expressions of interest under two options: One was to submit a consolidated Reliance Capital level resolution as a going concern basis and option two was to submit separate resolution plans for eight business clusters/subsidiaries.

In the earlier debt resolution of Dewan Housing Finance Corporation (DHFL), the Piramal group had made a cash offer along with debentures to the lenders to be paid over the next few years.

One of the bidders said they have already received access to the data room and have not received any communication on the changed bidding process.

Of the 50-odd Expressions of Interest received by the administrator in March, around 22 companies have bid for Reliance Capital as a whole company, while the rest have bid for profit making subsidiaries individually or in a consortium.

Adani Finserve, Piramal, Yes Bank, Indusind International Holding are some of the leading names that have bid for RCAP at the consolidated level.

The COC has also decided to direct all the bidders of only profit making companies under option two to form a consortium amongst themselves and then bid for Reliance Capital at the company level.

The source said some of the insurance companies of Reliance Capital are profit making entities and are well capitalized and lenders are of the opinion these companies are not facing any stress. As per the new plan, the new consortiums will also have to bid on an all cash basis, like bidders of option one. The bidders under Option two will be given 30 days to form a consortium amongst themselves.

This means a company which has submitted EoI only for the life insurance business or general insurance business of Reliance Capital has to form a consortium with other companies who have bid for other businesses of Reliance Capital and then the consortium will have to submit a financial bid at the company level.

With this, the competition among bidders will decline as the total number of bidders will also come down substantially.  The creditors of Reliance Capital have made claims of Rs 23,666 crore against the company.