National Asset Reconstruction Company Ltd (NARCL) emerged as the top bidder in the auction of two finance firms, Srei Infrastructure Finance and Srei Equipment Finance, which began on Tuesday. NARCL secured the highest bid with a net present value (NPV) of Rs 5,555 crore.

In the final round, two bidders were competing – NARCL and Authum with an NPV of Rs 5,526 crore.

NARCL’s bid includes an upfront cash payment of Rs 3,000 crore and the issuance of optional convertible bonds worth Rs 6,000 crore, banking sources said.

Three bidders – Varde Partners and the Arena consortium, NARCL and Authum Investment and Infrastructure participated in the auction, which was held on an electronic platform.

As the auction involved five rounds, the committee of creditors (CoC) meeting lasted from midnight until around 1 am, they added.

The total value of the resolution plan submitted by the applicant includes cash advances and deferred payments using instruments such as bonds. The timeline for liquidation of dues is between 3-7 years.

Lenders will now look at the final settlement plans and the conditions therein. The source said the COC would likely meet on January 7, 2023.

NARCL, which is majority-owned by public sector banks, has made it clear that it will not be able to provide government-backed guarantees.

In October 2021, the Reserve Bank of India (RBI) replaced the boards of Srei Infrastructure Finance and Srei Equipment Finance, which had gone bankrupt due to governance issues and defaulted payments. It also appointed Rajneesh Sharma, former lead managing director of Bank of Baroda, as an administrator of the company.

Financial creditors have admitted claims totalling over Rs 32,000 crore. Financial lenders include State Bank of India, Punjab and Sindh Bank, Axis Bank, HDFC Bank, Union Bank of India, IDBI Bank, UCO Bank and Indian Overseas Bank.