March 20, 2023

Indicating lukewarm response for the assets of Reliance Capital (RCap), four — IndusInd, Torrent, Oaktree Capital Management, and B-Right Realestate — have made financial bids for RCap as an entire company, with all bids around Rs 4,000 crore, signalling massive haircut for banks if approved by a lender’s committee.

Piramal Enterprises, Zurich Insurance, and Advent International have placed bids for Reliance General Insurance, while there were no takers for the life insurance arm, informed banking sources.

Naveen Jindal-owned Jindal Steel & Power and UV Asset Reconstruction Company (ARC) have submitted bids for RCap’s ARC business.

For other assorted assets of RCap, three bidders — Choice Equity, Global Fincap, and Grand Bhawan — have submitted their bids.

Several lenders, including Life Insurance Corporation (LIC) of India, have made total claims of Rs 25,333 crore against RCap after the company was sent for debt resolution under the Insolvency and Bankruptcy Code, 2016.

Fifty-four had responded with expressions of interest (EoIs) for the company and its assets, but the nature and number of bids reflect the poor response from bidders for RCap’s assets, said bankers.

Two subsidiaries of RCap — home finance and non-banking finance company — have an additional debt of Rs 25,000 crore on their books. The lenders have decided to place the equity of Reliance Commercial Finance and Reliance Home Finance — the subsidiaries of RCap — in a separate trust. This is being done so that potential bidders do not have to deal with these entities. The proposed trust structure will ensure bidders of the parent firm do not have to deal with additional debt.

The RCap resolution has been fraught with regulatory hurdles since the beginning of the process. The precondition of forming a consortium by different bidders for RCap’s multiple business clusters, and the condition to make all-cash bids, drove most bidders away.

LIC tried to sell its exposure in bonds worth Rs 3,400 crore issued by RCap, but did not find takers among ARCs. This comes at a time when the deadline to submit EoIs has expired. The bonds are trading at 70 per cent discount and LIC has sought the bids again for the loan.

Notwithstanding poor response, lenders are hopeful they will be able to resolve the combined debt of RCap and its subsidiaries worth Rs 50,333 crore by the end of the current financial year (2022-23).

RCap was sent for debt resolution by the Reserve Bank of India in November last year after the company, earlier owned by Anil Ambani, defaulted on its loans.

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