Cosmea Financial-Piramal Capital combine, which had submitted the highest bid under the resolution process of Reliance Capital, has withdrawn its bid a day ahead of the e-auction process owing to the structure of the process and the base price being very high, sources told businessline.
Cosmea Financial had submitted a combined binding bid of ₹5,231 crore with Piramal Capital, wherein the liability of Piramal Capital was limited only to Reliance General Insurance.
Cosmea’s exit has raised questions over Piramal’s participation. Piramal Capital will now either have to bid for Reliance Capital as a whole or look for another partner, which is likely to be difficult a day before the e-auction, sources said.
Piramal Capital did not comment on the issue.
High base price
“The auction should have been done as per the Swiss Challenge method and even if not, the right structure should’ve been followed. In addition, the base price decided upon is also very high, and does not seem to be feasible,” a source said.
The base price for the e-auction has reportedly been set at ₹6,500 crore — ₹1,500 crore above the highest net present value of ₹5,000 crore as per the Cosmea-Piramal bid. In addition, there will be an increase of ₹1,000 crore for participation in the second and third rounds, ₹500 crore for the fourth round and ₹250 crore for each subsequent round of auction.
Further, the highest bidder and ranking of the bidders will not be declared after every round, which bidders believe is not transparent and as per the auction format, industry sources said.
The two-day e-auction for RCap will begin at 11.30 am on Wednesday, and will have four rounds which may be extended depending on the number and value of bids.
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