Lenders of Reliance Capital Limited (NSEI:RELCAPITAL) will hold an e-auction later in December 2022 for Anil Ambani's insolvent financial services company to identify the highest bidder, two people aware of the development told ET. There will be multiple rounds of bidding among resolution applicants until the highest bidder is identified. The highest offer of INR 52,310 million from Piramal Enterprises Limited (BSE:500302)-Cosmea Financial Holdings Private Limited team for Reliance Capital and its units will be the base bid for the e-auction, the people cited above said.

Hinduja Group Limited, Torrent Investments Private Limited and Oaktree Capital Group, LLC are among the other bidders that have offered to acquire Reliance Capital and all its units. In the first round, bidders must offer at least INR 10,000 million more than the base price to remain in the fray, the people said. In the second round, the bidders will have to improve their offers by INR 7,500 million over the highest offer received in the first round.

In the third round, the bidders must offer at least INR 5,000 million over the highest bid received in the second round. Resolution applicants will be invited to participate in the bidding process to be held between December 19, 2022 and December 22, 2022. Lenders on December 6, 2022 discussed two options - inviting closed bids or holding an e-auction among resolution applicants.

It was decided that an auction process will help narrow the wide gap between the liquidation value and the highest offer, one of the lenders said. Disappointed Lenders The highest offer received for Reliance Capital and its units was 60% below the aggregate liquidation value, which disappointed lenders. They are also not in favour of liquidation or piecemeal sale of assets over concerns that doing so may not fetch the best value for the company, the people said.

Duff & Phelps and RBSA, the two valuers associated with the insolvency, have pegged the liquidation value in the range of INR 125,000 to INR 130,000 million, the people said. Piramal-Cosmea's INR 52,310 million offer comprises Piramal acquiring Reliance General Insurance Company Limited, a wholly owned subsidiary of Reliance Capital, for INR 37,500 million. Cosmea would buy the remaining units for INR 14,810 million.

The duo has offered INR 42,500 million upfront and INR 9,810 million at the end of the second year. Sam Ghosh, founder-promoter of Cosmea Financial Holdings, headed Reliance Capital for almost nine years until 2017. Hinduja Group Limited offered INR 50,600 million, of which INR 41,000 million is upfront payments and INR 3,200 million at the end of the third, fifth and seventh years each.

Torrent Investments offered INR 45,000 million, of which INR 11,000 million is upfront and INR 34,000 million is over five years. Oaktree Capital proposed INR 42,000 million, wherein INR 10,000 million is upfront and INR 32,000 million is over five years. UV ARC proposed to act as a collection agent, whereby it would retain as a recovery fee 5% of the amount recovered from selling assets of Reliance Capital.

UV ARC estimated cash recoveries between INR 110,000 million and INR 150,000 million. Lenders, however, are keen to consider those bids that involve a higher upfront cash offer, the people cited above said.