The government-backed National Asset Reconstruction Company Limited (NARCL) has topped the challenge mechanism for the twin Srei NBFCs —Srei Infrastructure Finance Limited (SIFL) and Srei Equipment Finance Limited (SEFL) — with an estimated offer of Rs 5,555 crore.

After a late-night bidding on Tuesday, NARCL has trumped Authum Investment and Infrastructure’s bid of Rs 5,526 crore.

The third bidder in the challenge mechanism was a consortium of Varde Partners and Arena Investors, with a bid of around Rs 4,680 crore.

All the bids are in net present value terms. The consolidated committee of creditors of Srei last month approved a challenge mechanism to identify the highest committed financial proposal submitted by the resolution applicants as part of their respective resolution plans.

Under the challenge mechanism, a minimum threshold amount was set at Rs 3,000 crore towards upfront cash recovery.

This was a crucial element as the lenders wanted more upfront cash from prospective applicants and this was a matter of contention when the initial proposals were submitted.

Further, each of the resolution applicants were asked to provide a net present value (NPV) for each financial proposal and the proposal with the highest NPV was considered the highest evaluated financial proposal as part of the challenge mechanism. It is learnt that NARCL’s offer includes Rs 3,180 crore in upfront cash which is marginally above the threshold.

Srei Infrastructure Finance in a stock exchange filing said that the consolidated committee of creditors had met on Tuesday.

“At the aforesaid meeting, three prospective resolution applicants submitted financial proposals pursuant to the challenge mechanism approved by the Committee of Creditors,” SIFL filing on the BSE said.

Sources said there is around Rs 2,200 crore cash on Srei’s balance sheet and the successful bidder would have to infuse the remaining amount to meet the upfront requirements.

Once verified for legal compliance the proposals would be put for vote before the committee of creditors, which is likely to happen next week.

The process is expected to continue till January end and an extension of around 45 days has been sought from the NCLT to complete the process.