Torrent bids ₹8,640 cr upfront for Reliance Capital

Torrent Investments on Friday proposed to pay its entire bid of ₹8,640 crore upfront for acquiring Anil Ambani-promoted Reliance Capital, doubling its immediate payment offer made a day after the auction ended late in December, two people aware of the development told ET. Similarly, the Hinduja Group offered ₹8,110 crore upfront and ₹800 crore in deferred payments for the bankrupt financial services company, the people cited above said.

One lender told ET that the committee of creditors to Reliance Capital will evaluate both plans with regard to the terms and conditions and proposed payment structures. Lenders may either ask the companies to improve the resolution plans or may invite fresh bids since both offers are below the liquidation value - pegged between ₹12,500 crore and ₹13,000 crore. The revised Hinduja offer is 28% below liquidation value, while Torrent's plan misses that threshold by 31%.

Torrent and Hinduja have structured their resolution plans such that the net present value (NPV) is pegged at the respective bids they made at the December 21 auction. This is done to comply with the terms of the auction, the people said.


NPV is arrived at after discounting scheduled future payments at a rate discounted by the weighted average cost of capital.

NCLT Bench Directive
"Torrent has not changed its NPV; the terms of payment were revised, and the bid is in line with the terms of the auction," said one of the persons cited above.

Torrent declined to comment, while Hinduja Group could not immediately be reached for its comments.

A division bench of the National Company Law Tribunal (NCLT) directed Reliance Capital's administrator, Nageswara Rao Y, to present only plans that complied with the auction terms before verified creditors.

The tribunal's directive was in response to an application filed by Torrent after Hinduja Group reportedly submitted an improved plan a day after the auction concluded. The auction terms stated that a bidder could not change NPV after the auction ended. The tribunal specifically directed the administrator not to present Hinduja's late offer before the creditors, as reported by ET on January 3.

Following the tribunal's order, the administrator on Wednesday requested both bidders to submit plans in line with offers made at the auction. "Thus, both the bidders gave plans wherein NPV amount is unchanged by offering the entire amount upfront," said one of the lenders. Torrent Investments gave the highest offer at Rs 8,640 crore, while Hinduja offered Rs 8,110 crore upfront.

The Hinduja offer includes Rs 8,110 crore upfront, Rs 200 crore in the form of bonds and another Rs 600 crore for settlement of a loan raised by Reliance Capital by pledging the shares of Reliance General Insurance Company, the people said.

The administrator has admitted Rs 25,334 crore in claims from secured and unsecured financial creditors. Reliance Capital, undergoing insolvency proceedings, houses about 20 financial services companies, ranging from insurance to broking.