Reliance Capital likely to share RFRP with bidder by Wednesday; all cash bids to get highest score

Lenders of debt-ridden Reliance Capital Ltd (RCL) are likely to share the Request For Resolution Plan (RFRP) document with bidders by Wednesday or Thursday and bids with a high upfront cash payment component will get the maximum score as a part of the resolution process, sources said.

The RFRP document sets the guidelines for the submission and evaluation of the resolution plan and is shared with all the companies that have submitted Expression of Interest (EoI) for the submission of financial bids.

RCL had offered two options to all the bidders. Under the first option, companies could bid for Reliance Capital, including its eight subsidiaries or clusters. The second option gave the companies freedom to bid for its subsidiaries, individually or in a combination.

As per the RFRP document finalised by the lenders, companies bidding for RCL's different businesses under option 2, can only make all-cash bids and they will not be permitted to make deferred payment structure, sources said.

Companies bidding for RCL under option 1, will have the choice of making an all-cash bids or combination of upfront cash cum deferred payment bids, sources said.

As per the evaluation criteria, as proposed in the RFRP, all cash bids or bids with high upfront cash payment component will get maximum scores from the lenders, sources said.

The timeline for the payment of upfront cash proposed to be paid by the bidders will be 90 days as per the RFRP.

Any cash in the books of RCL or its subsidiaries, will accrue to the lenders and the same will not be considered towards upfront cash recovery from the successful bidder.

The bidders offering all cash bids will also be exempt from one of the evaluation criteria i.e. equity infusion for improvement of Business Operations, sources said, adding, the lenders will not take into account this particular criteria while evaluating the bids, if the bidder makes an all cash bid.

Notably, the bidders of different subsidiaries of RCL will have to form a consortium amongst themselves and then bid for the company level.

According to experts, this will reduce competition and even impact the recovery for the lenders as the number of bidders will significantly go down.

Out of 55 EOIs received for RCL and its multiple subsidiaries, 22 companies have expressed interest in buying Reliance Capital at the company level, while the rest have shown interest in different subsidiaries.

RCL has 8 businesses that are on the block. This includes general insurance, life insurance, health insurance, securities business, and asset reconstruction among others.

As all the subsidiaries of RCAP are running sound businesses, so the Administrator and lenders of the company cannot invite IBC compliant resolution plan for them.

Therefore, sources said, the Committee of Creditors (CoC) in their last meeting decided to ask all those bidders who had bid for different subsidiaries to form a consortium amongst themselves and then bid for Reliance Capital at the company level.

These bidders will now have to make an all cash bids for the company, which will impact the ultimate recovery for the lenders, sources said.

Some of the prominent bidders of RCL are ICICI Lombard, Tata AIG, HDFC Ergo, Nippon Life Insurance, Bandhan Financial Holdings, Adani Finserv, Yes Bank, Blackstone, Indusind International, and Brookfield.