Oaktree looks to exit race for RCap assets | The Financial Express

Oaktree looks to exit race for RCap assets

According to the sources, the foreign banks were pushing for descending auction, wherein the base price will be a fair value of Rs 17,000 crore.

Oaktree looks to exit race for RCap assets
The auction process is slated to begin from December 19.

Oaktree Capital, a bidder for Reliance Capital (RCap) as a core investment company, is looking to exit the ongoing resolution process after the committee of creditors (CoC) turned down its requests for additional information.

The global asset management firm had sought RCap’s financial results till December 31, 2022, and an extension to the auction date. The firm wants the auction date to be extended to January 31, 2023, beyond the date of completion of the resolution process.

According to the lenders, Oaktree’s demands are ‘impractical and cannot be fulfilled’. The CoC, at its meeting on Tuesday, had rejected these demands.

As per an earlier National Company Law Tribunal (NCLT) order, lenders have to complete the resolution process of RCap by January 31, 2023. This also prevents them from giving an extension to Oaktree Capital.

In case Oaktree decides not to continue with the resolution process, there will only be three bidders remaining in the race – the Cosmea-Piramal consortium, Hinduja Group and Torrent Group.

The auction process is slated to begin from December 19.

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On Tuesday, RCap’s CoC favoured an e-auction mode to complete the insolvency process of the debt-laden firm, voting against another suggestion of a liquidation process.

The CoC was of the opinion that the liquidation process would deplete the firm’s value further. The lenders discussed two options — closed cover auction and an e-auction — but RCap’s largest lenders, Life Insurance Corporation of India and Employees’ Provident Fund Organisation (EPFO), rejected the closed cover auction and voted in favour of e-auction.

Under the e-auction, lenders have two options – one to go for ascending auction or descending auction. Under the ascending auction process, which is favoured by LIC and EPFO, who together hold 35% of voting rights in CoC, the base price would be fixed at `5,300 crore. This was the highest bid quoted by Cosmea-Piramal consortium.

According to the sources, the foreign banks were pushing for descending auction, wherein the base price will be a fair value of Rs 17,000 crore.

The CoC, which will meet on Friday to finalise the auction process, has also initiated discussions with bidders who had submitted their final bids in November.

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First published on: 08-12-2022 at 06:30 IST