Reliance Capital’s assets are set to be auctioned for a second round on March 20, with a minimum upfront cash amount of Rs 9,000 crore required for interested bidders. However, the Torrent Group plans to challenge this in the Supreme Court. The Hinduja group and Torrent are among the prospective bidders, and they must provide a minimum upfront cash amount of Rs. 8,000 crore to participate in the auction.
During the first round of bidding, the minimum bid amount was set at Rs 9,500 crore. However, the second round requires a higher bid of Rs 10,000 crore, with an additional Rs 250 crore required for subsequent rounds. This was ordered by the National Company Law Appellate Tribunal, which sought to ensure that the assets fetch the maximum value. In the initial auction held in December, the Torrent Group won with a bid of Rs 8,640 crore. The Hinduja group offered Rs 9,000 crore after the auction, leading lenders to plan a second round of bidding. However, the Torrent Group objected to this decision and filed a court motion in January.
Under the new bidding rules, each bidder will have a 30-minute window to submit their bids in each round. If all bidders submit their bids before the 30-minute mark, the round will end. The administrator will announce the closure of each round, with a 30-minute break between rounds, as per the instructions of the Committee of Creditors (CoC).
In order to participate in the auction, bidders must present their financial proposals, with payments to creditors (excluding any equity offered to creditors) forming part of the Net Present Value (NPV) through upfront cash or deferred payment.If a bidder submits multiple financial proposals during a round, the one with the higher NPV will be taken into consideration.
It is worth noting that the Torrent Group plans to challenge the minimum upfront cash amount of Rs 9,000 crore required for bidders in the Supreme Court. The outcome of this legal challenge could potentially impact the auction process and the minimum bid amount required for interested bidders.
The secondary bidding round for Reliance Capital’s assets presents a lucrative opportunity for prospective buyers to acquire valuable holdings. The newly established regulations for the bidding process strive to ensure an equitable and open auction, with all contenders afforded an equal opportunity to present their propositions. The ultimate outcome of this bidding session will likely have consequential effects on both Reliance Capital’s creditors and the wider financial sector throughout India.