The Swiss Challenge process initiated by LIC to find bidders for its Rs 3,400 crore debt in Reliance Capital (RCAP) has failed miserably.
The IDBI Trusteeship, process advisor responsible for running the Swiss Challenge process on behalf of LIC, did not receive even a single bid, as the deadline for bid submission ended on Friday (November 25).
Prior to initiating the Swiss Challenge process, LIC had received a binding bid from ACRE SSG, Singapore, which offered 27 cents for each dollar, resulting in a 73 per cent haircut for LIC.
Based on ACRE's offer for LIC debt, Reliance Capital as a CIC (core investment company) is valued at around Rs 4,400 crore.
Both LIC and ACRE are members of Reliance Capital's Committee of Creditors (CoC) and their attempt to finalise a transaction close to the binding bids submission deadline (November 28) has upset the other lenders and bidders.
According to sources, RCAP lenders are upset as to why LIC initiated a separate parallel process to sell its RCAP debt so close to the bids submission deadline.
Bidders have also alleged a conflict of interest in the sale of LIC debt to ACRE, as both ACRE and LIC are members of RCAP's CoC. ACRE has an exposure of Rs 1,350 crore in RCAP.
According to a lender, ACRE SSG would not be compliant with Unpublished Price Sensitive Information (UPSI), as per the SEBI regulations.
As per the Insolvency And Bankruptcy (IBC) law, the CoC will receive the independent valuation of Duff & Phelps and RBSA on November 29 (the next day of the submission of binding bids), which will be available to all CoC members. So it's apparent that ACRE and LIC are trying to close a deal before the submission of the binding bids, and before the valuation is available.