Piramal, Zurich likely to go solo for RGIC bid

Piramal Group (Piramal) and Zurich Insurance Group (Zurich) are likely to make separate bids for Reliance General Insurance Company (RGIC) ahead of next week’s deadline after talks for a joint bid fell through.

Both Piramal and Zurich had submitted separate expressions of interest (Eois) for the general insurance business of the bankrupt Reliance Capital (Rcap).

Both Piramal and Zurich, which had submitted separate non-binding bids for the general insurance business of Rcap in August, had earlier planned hold 50 per cent each in the proposed special purpose vehicle.

Piramal had valued Rcap’s general insurance business at ~3,600 crore, while Zurich had quoted ~3,700 crore for the same. The two companies later decided to form a joint venture (JV) to make a bid, but due to differences on shareholder agreement and valuation, their talks collapsed, said banking sources.

Banking sources said Rcap assets are unlikely to fetch a good price for lenders, considering all the bidders are seeking additional time to make a final bid.

With lenders in no mood to extend the deadline again, the response from bidders will be half-hearted, they said. Moreover, once the top offer is made, the other bidders will be given the option to make a better offer under the Swiss challenge method to get better offers.

Private equity (PE) major Advent has submitted the highest non-binding bid of ~7,000 crore for the general insurance firm. This is nearly double the amount offered by Piramal and Zurich Insurance. Advent is unlikely to submit a binding bid for RGIC. “Advent changed its mind after the submission of non-binding bids as it realised it had overbid for RGIC. Since the fund has a life and is in line with its policy, it is not allowed to make investments where there is a condition of a lock-in period,” said a banker.

Guidelines by the Insurance Regulatory and Development Authority of India (Irdai) stipulate a fiveyear lock-in for PE investors in Indian insurance.