Cosmea consortium exits RCap auction at the last minute; Piramal stays in race


MUMBAI : In a setback to Reliance Capital Ltd’s resolution process, the Cosmea Financial Holdings-Piramal Group consortium, the highest bidder, pulled out a day before of the auction is to be held by the committee of creditors, said two officials in the know.

However, Piramal Group will continue to be in the race, one of the two officials said, seeking anonymity.

In a letter to RCap’s administrator on Tuesday, Cosmea said it was withdrawing from the bidding of the holding company’s assets.

The Cosmea-Piramal consortium had bid for the company and its subsidiaries with Piramal group’s liability limited to Reliance General Insurance.

Incidentally, Soumen (Sam) Ghosh, the former chief executive officer of Reliance Capital, heads Cosmea.“Cosmea has decided to walk out of the resolution process. It believes that the revised base price of 6,500 crore is beyond expectation,” the first official added.

“According to the new rules, in the first and second rounds, bidders will have to increase the bid value by a minimum of 1,000 crore each. In the third and fourth rounds, the amount has to go up by 500 crore and 250 crore, respectively. This would mean that the required bids should be 7,500 crore, 8,500 crore, 9,000 crore, and 9,250 crore, respectively,” he said. The committee of creditors fixed a floor price of 6,500 crore for the auction, which is 1,500 crore more than the net present value of the Cosmea-Piramal resolution plan.

Last week the committee had called for an e-auction for RCap after they found that the initial bids were below the liquidation value. The lenders had asked the bidders to revise the bid price else the companies will go in for liquidation. The bidders and CoC agreed to hold the auction, which will take place on 22-23 December. With the exit of Cosmea-Piramal, now only three players are left in the race, including Hinduja Group, Torrent, and Oaktree.

Cosmea-Piramal, with a bid value of 5,231 crore, was the highest bidder for the holding firm RCap. Its offer included an upfront payment of 4,250 crore. Hinduja’s bid of 5,060 crore, including upfront payment of 4,100 crore, was the second highest. Torrent and Oaktree quoted 4,500 crore and 4,200 crore respectively, offering an upfront payment of 1,100 crore and 1,000 crore, respectively.

Reliance Capital was sent to debt resolution process under Insolvency and Bankruptcy Code in November 2021, after it defaulted on bank loans. The NBFC has a consolidated debt of nearly 40,000 crore.

As many as 55 entities had submitted their expressions of interest in February for RCap’s assets, but only 14 companies submitted non-binding bids by the end of August.

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