Sudhir Valia of Suraksha Asset Reconstruction Company may pip the well-known Adani and Kotak in the bid to acquire Jaypee Infratech, the insolvency-hit company that has to deliver around 25,000 houses in Noida and also runs Taj Expressway.
Valia is a kin of Sun Pharma promoter Dilip Sanghvi and a director on the company’s board. The low-profile businessman has offered to pay around Rs 7,000 cr for Jaypee Infratech, based on the current valuations. This is definitely much better than Adani Group’s Rs 5,500 cr bid. Also, Adani Group is believed to have put tough conditions that banks are not ready to accept.
While a consortium comprising Kotak Realty and Cube Highways has offered around Rs 8,000 cr, it wants bifurcation of the company’s highway operations and the real estate projects. Valia’s offer is far more flexible, though a final decision on the winning bid is yet to be taken.
An early resolution of the question of who will acquire Jaypee Infratech is bound to bring much cheer and hope to thousands of home buyers of the much delayed project. Valia intends to finish construction of flats in five years — at least two years more than the current schedule for completion. In addition, the bidder wants exemptions from payment of penalties.
Valia is ready to invest Rs 3,000-3,500 cr in the construction of flats and has indicated Yes Bank will provide the necessary funds. Yes Bank is already a lender to Jaypee Hospital (a part of Jaypee Infratech) and had earlier offered loans at 16% to Jaiprakash Associates, the majority shareholder in the company facing insolvency proceedings. But the deal did not go through as other lenders believed that the money would only be used to avoid NPA tag for the hospital venture. The offer also involves an upfront payment of around Rs 2,000 cr to lenders, and swapping land for loans of around Rs 5,000 cr. The preference for Valia came at a meeting of the committee of creditors on Monday.
Banks will hold further discussions with the bidder to try and get a better deal given that the liquidation value of the project is estimated to be around Rs 8,000 cr. Total loans to the project add up to around Rs 10,000 cr. Lenders are not likely to opt for liquidation given the public interest involved and SC’s insistence that the interest of the home buyers needs to be protected.
Adani Group seems to be losing ground in the bid as it is believed to have put tough riders in Monday's meeting that included waiver from payment of compensation to home buyers and farmers and waiver of land transfer charges. This was unacceptable to banks. Also, it’s bid was lower than the other two on the table.
The only factor that is not in favour of Suraksha Realty is the fact that Valia has no experience in Delhi NCR and Jaypee Infra’s scale of operations is massive.