Hinduja Group, the sole bidder for Reliance Capital (RCap), is in discussions with a clutch of lenders to raise up to Rs 8,000 crore to fund its proposed takeover of the former Anil Ambani group company.
IndusInd International Holding (IIHL), the company through which Hinduja Group placed its bids, has received commitment letters from JP Morgan, Standard Chartered Bank, Barclays, Apollo Global Management, Varde Partners and Farallon Capital.
Some of these firms have already provided commitment letters to IIHL. The company plans to fund the Rs 10,000-crore acquisition through a combination of debt and equity, with a debt-equity ratio of 80:20, sources close to the development said.
Mauritius-based IIHL is a holding-investment arm of Hinduja Group and is headquartered in the UK. The firm, helmed by Ashok P Hinduja as its chairman, has investments across sectors and companies. It holds a 12.58% stake in the group-owned IndusInd Bank.
On April 26, the Hinduja Group had quoted Rs 9,650 crore for the entire assets of RCap, offering the entire amount in upfront cash, as other bidders stayed away from the second e-auction. The bid amount was much lower than the bankrupt firm’s liquidation value of Rs 13,000 crore.
Torrent Group and Oaktree Capital, the two other prospective bidders, did not participate in the process alleging lack of clarity. They also accused the RCap’s Committee of Creditors (CoC) of not offering “finality” through the extended challenge mechanism.
The bid price of Rs 9,650 crore would give the lenders a total of Rs 10,100 crore, as RCap already has Rs 500 crore in cash on its books. The recovery for secured lenders will be about 70%. The total secured debt of RCap is at about Rs 16,400 crore. However, the bid price falls below the liquidation value of Rs 13,000 crore as assessed by two independent valuers — RBSA and Duff & Phelps.
On April 27, Hinduja Group offered to infuse another Rs 350 crore, increasing its total bid value to Rs 10,000 crore. Of this, Rs 300 crore will be infused into Reliance General Insurance Company (RGICL), a subsidiary of RCap, and another Rs 50 crore for items that were not part of the insolvency proceedings.