Business insurance

Piramal and Zurich Insurance jointly tender for Reliance General Insurance

The Piramal Group and Zurich Insurance, which had filed separate bids for the general insurance business of the bankrupt Reliance Capital, have decided to form a joint venture to bid on Reliance General Insurance Company (RGIC).

Piramal and Zurich will each own 50% of the proposed special purpose vehicle (SPV). The SPV would make the bid binding on the company with Rs 75 crore on deposit.

The bankers said that if the proposed SPV is successful in buying RGIC, it will mark Zurich Insurance’s entry into the general insurance business in India.

According to indicative offers submitted at the end of August, Piramal had valued RGIC at Rs 3,600 crore, while Zurich Insurance had quoted an indicative offer of Rs 3,700 crore. The third bidder, Advent, had submitted the highest bid of a Rs 7,000 crore resolution plan for RGIC.

With the proposed joint venture, Zurich and Piramal will not compete with each other. It will now be a two-man race between Advent and the Zurich-Piramal consortium.

The RCAP administrator and the Committee of Creditors (CoC) had appointed a global valuation expert, Willis Tower Watson, to carry out a valuation of RGIC. This valuation is available to all bidders and the actuarial valuation for 100% of the RGIC at Rs 9,450 crore – far higher than the indicative bids received from bidders.

The deadline for submitting binding bids for Reliance Capital has been extended to the end of October after all bidders requested additional time to complete their due diligence. The CoC granted a four-week extension despite few bidders requesting time until the end of January.

Reliance Capital had received 14 non-binding offers for the company as a whole and its multiple businesses. Six companies submitted bids for the entire company, while the remaining bidders submitted bids for its multiple subsidiaries.

Ahmedabad-based Torrent Group, which made an indicative offer for Reliance Capital as a whole, plans to make a separate offer for Reliance Nippon Life Insurance Company (RNLIC), a 51/49 joint venture between Reliance Capital (RCap) and Nippon Life of Japan. The administrator has solicited bids for a 51% stake in Reliance Nippon LIC.

Reliance Capital is subject to bankruptcy proceedings and the administrator has requested bids for the entire company and for its various business units. During the process, no offers were received for the life insurance business, although lenders received indicative offers for the entire company and for various other companies owned by Reliance Capital.

The bankers said an appraiser appointed by the administrator of the life business has pegged the company’s intrinsic value at Rs 5,800 crore. Based on this valuation, Torrent plans to make an investment of Rs 2,900 crore to acquire 51% of RNLIC, a source said.

Bankers said the for-profit insurance legs are getting a good response from bidders, but Reliance Capital’s other legs are getting a lukewarm response.