Varde-Arena Offer Rs 14,500 Crore For Srei Group NBFCs
Srei Group's NBFCs find serious bidders among Varde Partners and Arena Investors.
A consortium of Varde Partners and Arena Investors have submitted a Rs 14,500 crore bid for Srei Group's non-bank finance companies under the Insolvency and Bankruptcy Code, according to two people with knowledge of the matter, who spoke on condition of anonymity.
The bids, submitted this week, were opened by lenders as part of the process. Another offer by a clutch of investors led by UK-based entrepreneur Shon Randhawa is yet to be thoroughly examined, since this group did not submit the earnest money deposit, as is required under the insolvency proceedings.
BQ Prime had reported on Aug. 11 that Srei Group's NBFCs had received only two bids.
According to the people quoted above, the Varde-Arena offer includes:
Rs 3,000 crore in upfront cash (including Rs 2,000-2,500 crore available on the balance sheets of the two NBFCs).
Rs 150 crore worth of equity infusion in Srei Infrastructure Finance Ltd.
Rs 1,400 crore worth of equity shares in Srei Equipment Finance Ltd. to be given to banks.
Rs 10,000 crore in deferred payments to be repaid over the next few years.
Financial creditors have claims worth Rs 10,727.5 crore against Srei Infrastructure Finance and Rs 31,867.8 crore against Srei Equipment Finance.
Queries mailed to Arena Investors and the Srei Group administrator did not yield any response on Wednesday. Varde Partners declined to comment.
According to the second person quoted above, while Arena Investors will be responsible for growing the non-bank lending businesses, Varde Partners, through its asset reconstruction company in India, will recover the stressed assets on their balance sheets.
The resolution process for Srei Infrastructure and Srei Equipment Finance will now enter the negotiation phase, as lenders have invited the bidders to detail their bids. For a successful completion of the resolution process, at least 66% of the financial creditors by value have to approve a plan.
This 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 by the Reserve Bank of India.
During the course of insolvency, the RBI-appointed administrator for the two NBFCs found transactions with fraudulent transactions in two separate instances.
In June, the administrator highlighted fraudulent transactions and notional losses worth Rs 3,000 crore. Again in July, similar transactions worth Rs 2,100 crore were highlighted.