RCap auction: Hinduja sole player in fray, bids Rs 9,650cr

Mumbai: The Hinduja Group, through IndusInd International Holdings, was the sole bidder in the second round of auction for Reliance Capital (RCap) held on Wednesday with a bid of Rs 9,650 crore. This development will likely place the leading creditors, the Life Insurance Corporation (LIC) and the Employee Provident Fund Organisation (EPFO), in a quandary as the liquidation value is believed to be Rs 12,500 crore.

Besides being a non-banking finance company, RCap was the holding company for Anil Ambani’s financial services businesses. Following the company’s bankruptcy, the most valuable assets left in the group are the general insurance and life insurance subsidiaries of RCap. Insurance industry sources said that while RCap’s holdings in the insurance companies were worth well over Rs 10,000 crore, the complications over the bankruptcy were resulting in distress valuations.

In Wednesday’s auction, Torrent Group, which had approached the Supreme Court in an attempt to stall the second round, did not participate. Torrent was the highest bidder in the first round, with Rs 8,640 crore. In February, the National Company Law Tribunal declared Torrent as the highest bidder, stating that Hinduja’s belated bid after the process ended was invalid. The National Company Law Appellate Tribunal (NCLAT) had allowed the bidders to go ahead and hold another round of auction. Torrent challenged the NCLAT order in the Supreme Court, but failed to obtain a stay.

In response to Torrent’s plea, the Supreme Court said it will examine the case and seek a response from IndusInd International, Vistara ITCL (which represents bondholders), Asset Care and Reconstruction Enterprise, Yes Bank and others. Sources said that it was likely that the Supreme Court would have the final say in the matter.

The Hindujas-promoted IndusInd Bank is the only sizeable private bank without an insurance company in its fold. While RCap owns Reliance Nippon Life and Reliance General Insurance, Nippon Life will likely have a say in the transaction. Besides being the joint venture partner in the life business, RCap had pledged shares of the non-life company to the group’s lenders, which include Nippon Life.

The RBI superseded the board of RCap in November 2021 after the company failed to meet its debt obligations and appointed Nageswar Rao Y as the resolution professional. Initially, the committee of creditors allowed bidders to vie for either the whole group or clusters of the business. While many bidders showed interest in group companies, most candidates dropped out when it came to submitting binding bids.


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