The government-backed National Asset Reconstruction Company Ltd has taken lead in taking over two stressed entities of the Srei group as it submitted the "highest net present value bid of ₹5,555 crore" among bidders, an official said on Wednesday.
NARCL's net present value bid constitutes ₹3,200 crore in cash, a ₹1000-crore jump from the previous plans offered, said the official reported news agency PTI. The bid was submitted in the 10-hour-long "challenge mechanism" conducted by the committee of creditors (CoC) on Tuesday.
The official said that although NARCL has a “clear advantage" for taking control of Srei Infrastructure Finance and Srei Equipment Finance, the others Authum Investment and Infrastructure, another bidder in the insolvency resolution process for the two stressed assets ‘is not out of game’.
“Authum Investment and Infrastructure, another bidder is not out of the game even though it was behind marginally in the final and fifth financial challenge bidding round due to terms and conditions and legal compliance", the official said.
As a result of failing to raise bids above ₹4,800 crore, a consortium of Varde Partners and Arena Investors, another bidder in the resolution process, was “out of the race during the third round", he said.
"The challenge mechanism was successfully conducted and completed at midnight," Srei administrator Rajneesh Sharma told PTI without divulging details of the outcome of the process.
In the challenge mechanism process, two parameters - an upfront cash component and the net present value (NAV) of the committed amount under the financial proposals - are the key factors.
"There is ₹2,200 crore in cash on Srei's balance sheet. The successful bidder has to infuse ₹1,000 crore in cash to take over the Srei assets. Apart from cash, a short-term recovery worth ₹3,450 crore is expected in the next 2-3 years, while optionally convertible bonds worth ₹8,000 crore will be issued by the successful bidder for a period of up to seven years," a source quoted by PTI said.