Reliance Capital shares jump 3%; Hinduja Group entity emerges as sole bidder, offers Rs 9,650 crore

Shares of Reliance Capital climbed 3 per cent in Thursday's trade amid a media report that suggested Hinduja Group entity IndusInd International Holdings, a sole bidder for Reliance Capital at the auction on Wednesday offered Rs 9,650 crore for Reliance Capital in the second round, up from Rs 9,510 crore in the first round. According to a report in The Economic Times, as there were no counteroffers and that the auction process has concluded. Hinduja’s offer was Rs 1,000 more than what Torrent Investments offered in the first round in December, the report suggested. The auction was a part of its bankruptcy proceedings.

Following the development, the stock rose 2.82 per cent to hit a high of Rs 9.10 on BSE. The scrip has eroded 45 per cent of its value so far this year and 97.88 per cent in the last five years. Individuals with up to Rs 2 lakh shares account for 60.34 per cent of Reliance Capital's shares. On the other hand, individuals holding over Rs 2 lakh crore worth company shares account for another 26.88 per cent stake in the company. LIC owned 2.98 per cent in Reliance Capital as of March 31.

As per the ET report, Torrent Investments and Oaktree Capital, who had earlier indicated that they would participate in the process, did not submit any bids. A person in the know told the newspaper that Torrent participated in the mock auction drill and the pre-auction discussions but did not end up submitting a bid.  The threshold for participation in the auction was kept at Rs 9,500 crore, with Rs 8,000 crore as upfront cash, the report suggested.

Lenders had conveyed to the contenders that they would negotiate an improved offer only with the highest bidder, which in this case was the Hinduja group. In the first auction held in December, Torrent Investments made the highest offer of Rs 8,640 crore, followed by Hinduja Group at Rs 8,110 crore. Within 24 hours, Hinduja offered a revised bid of Rs 9,000 crore, which was then challenged by Torrent before the National Company Law Tribunal (NCLT).

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