Hinduja lone bidder for RCap in second auction, offers Rs 9,650 cr
Hinduja Group was the sole bidder for Reliance Capital, offering ₹9,650 crore to the bankrupt company’s lenders in a second round of auction on Wednesday.
Torrent, who is the highest bidder in the first round with a bid of Rs 8,640 crore, did not participate in the auction. US firm Oaktree Capital also stayed away. A source in Torrent said there had been no clarity in the auction process and that his concerns had not been addressed. Torrent moved the Supreme Court in March this year after Reliance Capital lenders decided to hold a second auction to maximize the value of the assets.
The Hinduja Group owns a stake in Indusind Bank and, if its auction bid is accepted, will also own two for-profit insurance projects from Reliance Capital.
In the first round which concluded in December 2022, Hinduja emerged as the second highest bidder with a bid of Rs 8,110 crore. Hinduja subsequently submitted a revised bid of ₹9,000 crore out of the auction process, which led to the lenders seeking a second auction.
Torrent moved the court to challenge Hinduja’s revised bid and the legality of the second auction. The case is currently pending in the Supreme Court. The Supreme Court allowed the lenders to conduct the second auction, subject to its final ruling on the matter. The next date for the hearing in this matter is scheduled for August this year.
In a letter to the Committee of Creditors (CoC), Torrent reiterated that the second auction was illegal and violated bankruptcy laws. Torrent said the process remains arbitrary and opaque as the Code of Conduct decided not to freeze plans for dissolution (except for a financial proposal) prior to an expanded appeals mechanism. This will allow the bidder to void the process again by changing their bid outside of the auction.
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Torrent said that the Code of Conduct offered no finality in the process even through the second auction and that the Code of Conduct reserved its right under the auction to continue negotiating with the highest-bid solution applicant. Torrent was not given such a right to negotiate only with the highest bidder despite appearing as the highest bidder in the first auction.
Torrent said that the Code of Conduct wants to bind bidders but does not want to provide any certainty or sanctity of the process and confirmation of the finality of the negotiations, and added that this open process is only fertile ground for more bids being dropped by deviant bidders and the consequent lawsuits judicial. Which leads to more delays.
Despite the second auction, Hinduja’s bid falls well short of the liquidation value of Rs 13,000 crore.
Reliance Capital, previously owned by Anil Ambani, has been sent to settle debts under the Insolvency and Bankruptcy Act 2016 after it failed to pay debts worth Rs 24,000 crore.