The 100% stake acquisition in Reliance General Insurance and 51 percent stake in Reliance Nippon Life Insurance among other assets would clear the path for Torrent group to foray into financial services. Torrent Group leads Torrent Pharmaceutical which is one of the major pharma companies in the country.
Ahmedabad’s torrent group has won the bid to acquire Reliance Capital after it made an offer of a whopping Rs 8,640 crore in an auction held on 21st December. The decision of bidding Rs. 8,640 for Reliance Capital was of The promoter entities of the Torrent group. Participating in the auction was also; the Hinduja group which made an offer of Rs. 8,150 crores but was beaten by the Torrent group’s bid; according to the banking sources.
The 100% stake acquisition in Reliance General Insurance and 51 percent stake in Reliance Nippon Life Insurance among other assets would clear the path for Torrent group to foray into financial services. Torrent Group leads Torrent Pharmaceutical which is one of the major pharma companies in the country.
Torrent’s offer is below the liquidation value of Reliance Capital as a whole but is significantly more than Cosmea-Piramal’s binding offer of Rs 5,231 crore. The lenders will meet and decide to strategize the handing over of the company to Torrent group and evaluate the bids on the criteria of an upfront cash offer and net present value etc.
It is to be noted that Reliance Capital was sent for debt resolution in November 2021 under the Insolvency and Bankruptcy Code, 2016, after defaulting on bank borrowings of worth Rs 24,000 crore
According to valuation reports by Duff & Phelps and RBSA Advisors; the liquidation price of Reliance Capital was priced at Rs 12,500 crore and Rs 13,200 crore, by both firms respectively. According to Duff and Phelps, the liquidation value of Reliance General Insurance standalone is worth Rs 7,000 crore, and that of Reliance Nippon Life Insurance is Rs 4,000 crore; thus in effect, the liquidation value of Reliance Capital is far higher than the value of the bids received.
It is noteworthy that the Rs 21,000-crore Ahmedabad Torrent group has 56-year-old Samir Mehta at its helm and under his leadership, the group has taken several strategic initiatives, such as tapping into new sectors such as power and city gas distribution etc.
