Muted response to RCAP bid process, only five companies submit bid

The final round of Reliance Capital's bidding process has received a poor response from the bidders as the big players like Adani, Tata, HDFC Ergo, Yes Bank, ICICI, Brookfield, Capri Global, etc., have not bid for the company or its multiple subsidiaries.

According to the sources, only five bids have come in under option 1 for the Reliance Capital as a Core Investment Company (CIC).

The option 1 bidders are Hinduja, Torrent, Oaktree, Cosmea Financial and Piramal consortium, and UAVRCL.

These companies have submitted their resolution plans for Reliance Capital as a company.

Out of these five bidders, UVARCL has bid on a fee basis, which means that it will further sell RCAP assets and make repayments to lenders, as and when the sale happens.

Surprisingly, no separate bids have come for Reliance General Insurance Company (RGIC) and Reliance Nippon Life Insurance Company (RNLIC)

Zurich Insurance and Advent, who had submitted non-binding bids for RGIC in the initial round, have stayed away in this final round.

Interestingly, both Aditya Birla Sun Life Insurance and Nippon Life Insurance of Japan, who were fighting for RCAP's 51 per cent stake in the life insurance business, have not submitted any bid for RNLIC.

Nippon Life, Japan has not put in a separate bid to increase its stake in RNLIC, from 49 per cent to 74 per cent.

In the absence of separate bids for RGIC and RNLIC, the Committee of Creditors (COC) design to stitch an Option-1 plan by combining the different bids of RCAP clusters has failed.

The RCAP COC had given 2 options to the bidders.

Under option 1, bidders were to bid for Reliance Capital as a company, and under option 2, multiple businesses of RCAP like General Insurance, Life Insurance, Commercial Finance, Home Finance, Securities business, ARC, etc., were divided into 8 different clusters.

The objective of the cluster bidding was to first get separate bids for RGIC and RNLIC, which account for over 90 per cent of the total RCAP value, and then stitch them together to make the option 1 bidders compete against them.

With no separate bidders for RCAP's general and life insurance businesses in the final round, this plan of the lenders seems to have failed.