Reliance Capital Lenders Approve Hinduja’s Rs 9,661 Cr Bid
Reliance Capital, a troubled financial services company, has finally reached a resolution in its long insolvency resolution process as the Committee of Creditors (CoC) approved the proposal from IndusInd International Holdings Ltd (IIHL), part of the Hinduja Group. According to sources familiar with the matter, IIHL’s resolution plan received an overwhelming majority of votes, with 99.6 percent of the lenders in favor. The approval came after a voting process concluded on Thursday.
As part of the Insolvency and Bankruptcy Code (IBC) proceedings, IIHL has proposed to acquire Reliance Capital for a total of Rs 9,661 crore in upfront cash. In addition, Reliance Capital has a cash balance of approximately Rs 350-400 crore, which will be distributed among the lenders. This comprehensive recovery plan is expected to result in a total recovery of around Rs 10,000 crore for the lenders, including the cash on the company’s books.
The Administrator of Reliance Capital will now submit IIHL’s resolution plan to the National Company Law Tribunal (NCLT) in Mumbai for final approval, which is anticipated to occur next week. This crucial step will determine the fate of the proposed acquisition and recovery plan.
In the previous auction held on April 26, Hinduja’s IIHL emerged as the sole bidder for Reliance Capital, with other potential suitors such as Torrent Investments, Oaktree Capital, and the Piramal-Cosmea consortium abstaining from submitting bids.
The lenders had set a participation threshold of Rs 9,500 crore for the auction, requiring a minimum upfront cash payment of Rs 8,000 crore. Initially, the Hinduja Group offered Rs 9,510 crore in the first round, which was subsequently raised to Rs 9,650 crore in the second and final round. The bid amount has now been slightly increased to Rs 9,661 crore, according to individuals familiar with the matter.
It is worth noting that Reliance Capital is currently facing claims totaling Rs 25,334 crore from secured and unsecured financial creditors under the IBC. The CoC’s approval of IIHL’s resolution plan signifies a significant step towards resolving Reliance Capital’s financial woes. The administrator of Reliance Capital refrained from commenting on the recent developments.
Last year, on November 30, the Reserve Bank of India superseded Reliance Capital’s board due to governance concerns and referred the company to the bankruptcy courts for resolution. Reliance Capital, which operates as a core investment company with 20 units encompassing insurance, broking, and asset reconstruction, is now on the path towards finding a solution under the approved bid from the Hinduja Group.
About Reliance Capital:
Reliance Capital Limited is a financial services holding company based in India that operates under the Reliance Anil Dhirubhai Ambani Group. It is a constituent of the Nifty Midcap 50 and MSCI Global Small Cap Index, and is affiliated with the Reliance Group.
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