Srei Group NBFCs Receive Two Bids Under IBC
Srei Group NBFCs find two offers on the table, but submission deadline gets extended to Aug. 19.
The combined assets of Srei Infrastructure Finance Ltd. and Srei Equipment Finance Ltd. have received two bids under the Insolvency and Bankruptcy Code, according to two people with direct knowledge of the matter.
U.S.-based Arena Investors LP and distressed assets investor Varde Partners have submitted a joint bid for the assets, the people told BQ Prime on the condition of anonymity. The second bid came from Shon Randhawa, a U.K.-based entrepreneur and chief executive officer of Talitha Collection Ltd., and her partners.
Randhawa, according to details available on Zauba Corp, is also a director on the boards of multiple infrastructure firms such as Randhawa Construction Pvt., Neelganga Infracon Pvt. and Randhawa Buildcon Pvt.
Queries mailed to Varde Partners, Arena Investors and Srei Group’s administrator on Thursday were not immediately answered. A communication address for Randhawa was not immediately available.
Both bids came without the earnest money deposits, as is mandated under the bidding process. The financial creditors of Srei Group non-bank finance companies have provided an extended deadline of Aug. 19 to submit the deposits, the two people quoted above said.
The bids will be opened and their eligibility will be tested, after Aug. 19, the people said. While anyone can bid in this interim period, creditors are not expecting a new bidder to enter the fray, they said.
BQ Prime had previously reported that the list of prospective bidders reduced significantly after 13 firms submitted their expressions of interest to buy the Srei Group companies this year. This was after the bidders saw the quality of assets housed under these two NBFCs.
In June, the Reserve Bank of India-appointed administrator for the two companies unearthed more than Rs 3,000 crore worth fraudulent transactions conducted over FY20 and FY21.
Loans involved with these fraudulent transactions were at Rs 2,512 crore, while the notional loss to the company stood at Rs 513.67 crore, the administrator had said in an exchange notification. The notional loss was on account of charging lower interest rates while lending to 14 companies.
Already a few lenders, including Union Bank of India and Punjab & Sindh Bank have classified the loan accounts as fraud.
The resolution process at Srei Group NBFCs has been ongoing since December 2020, much before the regulator initiated insolvency proceedings. The group had previously proposed to invite investments in Srei Equipment Finance from international private equity investors. But the plan did not materialise.
In October 2021, the two group companies were referred to insolvency resolution. Financial creditors have claims worth Rs 10,727.5 crore against Srei Infrastructure Finance and Rs 31,867.8 crore against Srei Equipment Finance.