NARCL wins the bidding war for SREI group companies

After a lengthy auction that lasted beyond midnight, National Asset Reconstruction Co. Ltd emerged as the highest bidder for the assets of Kolkata-based Srei Group.

After a protracted auction procedure that finished after midnight on Wednesday, the National Asset Reconstruction Co. Ltd (NARCL) was revealed as the highest bidder for the assets of the Kolkata-based Srei Group, according to two persons with knowledge of the situation.

The highest offer was made by NARCL, with a net present value (NPV) of ₹5,555 crores, including ₹3,400 crores in upfront cash and ₹6,000 crores in optionally convertible bonds.

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The offer is in line with lenders’ expectations and is worth ₹1,000 crore more than its prior offering.

The present value of anticipated cash flows is measured by NPV.

The last remaining candidate, Authum Investment, increased its offer from the initial ₹2,800 crore to ₹5,526 crore, falling just ₹30 crore short of the winning price.

Early in the competition, a group made up of Arena Investors and Varde Partners withdrew.

On Tuesday, the committee of creditors (CoC) held a 10-hour “challenge mechanism” during which the updated offers were submitted.

The lenders asked the bidders to revise the initial proposals they had provided in early December, which resulted in the auction process being called.

Emails addressed to the administrator of Srei and the official NARCL address went unanswered.

Srei now has ₹2,200 crore in cash on hand.

For Srei’s assets to be transferred to the winning bidder, $1 billion in cash must be invested.

Additionally, Srei is anticipated to recoup ₹3,450 crore over the following two to three years. The total cost of the entire resolution plan, which includes the upfront cash and ₹6,000 crore in seven-year optionally convertible bonds, comes to almost ₹14,000 crore.

On January 7, Srei’s lenders will convene to discuss the timelines before voting that same week.

Enders anticipate that the entire process will last until the end of January and are hoping that the National Company Law Tribunal will grant them a deadline extension (NCLT).

The boards of Srei Infrastructure Finance Ltd (SIFL) and Srei Equipment Finance Ltd (SEFL) were replaced by the Reserve Bank of India in October 2021, and the businesses were then referred to the bankruptcy court.

The companies are facing claims from 44 lenders totaling ₹32,750 crore. The 17 final applicants for SIFL and SEFL resolutions included the three bidders. On the final list of prospective resolution applicants were investors like Capri Global and AM Mining, a division of ArcelorMittal, who subsequently decided against applying.

State Bank of India, Punjab and Sind Bank, Axis Bank, HDFC Bank, Union-Bank-of-India, IDBI-Bank, UCO-Bank, and an Indian Overseas Bank are some of the financial backers of the two Srei firms.