Reliance Capital Second Auction Starts Tuesday Amid Torrent Litigation

Lenders will begin their second auction to sell bankrupt Reliance Capital's assets as the Torrent group, the highest bidder in the first round, pursues litigation in the Supreme Court.

Lenders hope that the Hinduja group and Torrent will participate in the second auction and maximise the value of the assets. The lenders have kept Rs 9,000 crore as the floor price for the second auction which can be increased by Rs 500 crore in the second round and by Rs 250 crore for the next round. All bidders will have to give Rs 8,000 crore as upfront cash with their offers.

Torrent, which had made an offer of Rs 8,650 crore in the first round, has warned that it will not participate in the second auction till the Supreme Court decides on its petition which will be heard in August this year.

If Torrent wins the race to acquire Reliance Capital, it plans to infuse additional capital into the insurance companies. Interestingly, the Piramal group and private equity firm TPG plan to sell their 30 per cent stake in Shriram General Insurance at a valuation of $2 billion (Rs 16,400 crore) for the entire company. In comparison, Reliance Capital holds 51 per cent stake in Reliance Nippon Life Insurance and 100 per cent stake in Reliance General Insurance. Both insurance companies are profit making.

The Hindujas have told lenders that they will retain their earlier bid of Rs 9,000 crore of upfront cash and it's still valid.

Reliance Capital was sent for debt resolution under the Insolvency and Bankruptcy Code 2016 in November 2021 for defaulting to debt worth Rs 24,000 crore.