LIC Puts Rs613cr KSK Mahanadi Debt on the Block
LIC Puts Rs613cr KSK Mahanadi Debt on the Block

The Life Insurance Corporation of India (LIC) has invited bids for its Rs.613-crore debt exposure to KSK Mahanadi Power after it received an anchor offer from Rare ARC, the source said.

A Swiss challenge auction was sparked by an offer of Rs188 crore from the Ahmedabad-based ARC, and on Wednesday, LIC requested counteroffers from other ARCs, according to the sources. As an anchor bidder, Rare ARC will be given priority to match the counteroffer.

In the past two years, LIC has attempted three times to sell some of its troubled loans to ARCs but has called off those efforts without informing the potential buyers.

On Wednesday, November 2, IDBI Capital Markets & Securities (IDBI Caps) requested counteroffers from ARC for a Swiss auction that had been triggered for the debt of KSK Mahanadi Power on behalf of its client, an insurance firm. The client's name and the details of the anchor offer were omitted by IDBI Caps.

According to IDBI Caps, those who are interested can submit expressions of interest by November 7. The LIC requested bids to sell 16 troubled loans totaling 8,091 crore in July 2021. However, it decided against selling the accounts after receiving reliable proposals.

It was earlier reported that, this year, LIC twice requested offers for the sale of its Rs. 3,400 crore debt to Reliance Capital but decided not to proceed with the transaction.

In an all-cash transaction, the State Bank of India sold Aditya Birla ARC its acknowledged claims of KSK Mahanadi Power worth Rs 5,058 crore for Rs 1,622 crore in the middle of August. It is the lone largest all-cash distressed loan deal between a bank and an ARC.

Since October 2019, KSK Mahanadi has been subject to insolvency procedures; however, a number of lawsuits have caused a delay in the sale process. Over the past two years, a number of other lenders, including Axis Bank, Bank of Baroda, and Punjab National Bank, have sold their debt to ARC.

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