Torrent Investments challenges lenders plan to hold a second auction for Reliance Capital

Torrent Investments, one of the bidders in the fray for Anil Ambani-promoted Reliance Capital, has challenged lenders' proposal to hold a second round of auction, people aware of the development told ET.

The Mumbai National Company Law Tribunal is scheduled to hear Torrent’s petition today.

Torrent Investments has pleaded that NCLT should direct the administrator, Nageswara Rao Y, not to hold lenders voting on the proposal of a second auction.


Last Friday, lenders proposed to hold a second round of auction with a minimum threshold price of Rs 9500 crore on a net present value basis which would include Rs 8000 crore as upfront cash payment, as reported by ET on January 9. The administrator had planned to invite lenders to vote on this proposal this week.

Torrent is of the view that the second round of auction will give the Hinduja Group entity, also the bidder in the fray for the financial services company, an opportunity to give an improved bid over them.

Lenders have proposed a second round of auction, hoping to get improved offers – at least above liquidation value. All offers for Reliance Capital have far been below the ₹12,500-13,000 crore liquidation value.

In the first round of the auction that ended on December 21, Torrent Investments had given the highest offer of Rs 8640 crore based on NPV- arrived at after discounting future cash flows. Hinduja had offered Rs 8110 crore on an NPV basis, while Piramal Enterprises -Cosmea Financial Holdings team, who were also race, did not participate in the auction.

A day after the auction, Hinduja submitted a revised, improved offer of Rs 9000 crore, including Rs 8750 crore as an upfront payment.

Torrent Investments sent a protest note to administrator Nageswara Rao Y stating that the revised Hinduja offer violated auction terms. Subsequently, Torrent moved the National Company Law Tribunal (NCLT), asking that the administrator be stopped from presenting the improved Hinduja offer to lenders as it didn't comply with the rules.

On January 3, the NCLT directed the administrator only to consider plans that were in line with the rules. The administrator said he would appeal against the order at the NCLT.