Foreign investors Varde Partners and Arena Investors LP have jointly submitted a bid to acquire Kolkata-based Srei group of companies under the insolvency and bankruptcy code, two people directly aware of the matter told CNBC-TV18.
Varde-Arena’s joint bid is among the two bids received for the Srei twins, Srei Infrastructure Finance Limited and Srei Equipment Finance Limited, and is likely to be the only serious contender, CNBC-TV18 has learnt. The second bid has come from little-known HNI investor consortium comprising of Shon Randhawa and Rajesh Viren Shah, according to people in the know.
The deadline to submit binding bids ended on Monday evening (August 29) after multiple extensions were granted earlier.
London-based Varde Partners is a global alternative investment firm, which is participating in the Srei insolvency resolution via its affiliate company VFSI Holdings. Arena Investors LP is a New York-based investment firm. The two foreign investors were among 13 suitors who had submitted expressions of interest to participate in Srei group companies’ insolvency.
“Varde and Arena were seen as rivals, but have surprisingly come together to submit a bid. We were expecting them to bid separately,” said one of the people quoted earlier. While Varde and Arena have submitted earnest money deposit (EMD) along with the bid, the Randhawa consortium did not submit the deposit, CNBC-TV18 has learnt. It may be likely that this may disqualify the Shon Randhawa consortium from participating in the resolution process, leaving Varde-Arena the sole bidders, said people involved in the matter.
In October last year, the Kolkata bench of the National Company Law Tribunal had admitted the Srei twins into the bankruptcy court after the Reserve Bank of India superseded the companies for defaults and asked banks to file an insolvency application. The RBI-appointed administrator has admitted claims of Rs 32,749.71 crore from financial creditors of the company so far, including Canara Bank, Union Bank of India, Punjab National Bank, SBI, Bank of Baroda, and Indian Bank, among others.
Between the two Srei Group companies, there is understood to be about Rs 2,100 crore of cash balance accumulated from repayment of loans and recoveries, which is expected to be passed on to the creditors of the companies, over and above the recovery made by them from the sale of the company.
So far, transaction auditor BDO India has classified four transactions totalling Rs 5,159.4 crore as fraudulent. The suitors had earlier expressed reservations about claim on recoveries from such fraudulent transactions, and sought more time to make a bid, but these issues are believed to have been settled by the creditors' committee.
The committee of creditors for Srei would soon be meeting to review these bids before initiating the process of negotiations with the bidders for the company, as per people in the know.
