Global biggies KKR, Blackstone, Apollo to bid for Reliance Capital assets

Some of the world’s biggest global financial companies, including Blackstone, KKR & Co, and Brookfield Asset Management, have submitted their expressions of interest (EoIs) for Reliance Capital and its assets. The financial arms of the Piramal, Adani, and Poonawala groups have also sent in their EoIs.

According to a person in the know, Nippon Life, JC Flowers, Oaktree Capital Management, Apollo Global, Arpwood Capital, Varde Partners, Multiples Alternate Asset Management, and Hero Fincorp have also joined the race. The Piramal group has already won the race for Dewan Housing Finance Corporation, pipping Oaktree and the Adani group. Reliance Capital is one of the three NBFCs (non-banking financial companies) going through the bankruptcy process. 

A resolution plan for Srei Infrastructure Finance is currently under process.

The administrator of Reliance Capital had extended the deadline for the submission of EOIs to March 25 from March 11 following requests by some prospective bidders who sought additional time to submit EOIs. The shortlisted companies will be asked to submit financial bids by May 5. Once EoIs are submitted, prospective buyers shall get access to the data room providing additional information to the bidders to make their financial bids.

The administrator had sought EoIs for Reliance Capital in eight clusters or the entire company. Most bidders which submitted EOIs have bid for the entire company.  The administrator had put on sale several Reliance Capital subsidiaries, including two profit-making companies -- Reliance General Insurance, and Reliance Nippon Life Insurance. Japan's Nippon Life is expected to increase its stake in the life insurance venture from the current 49 per cent.

Apart from the insurance ventures, Reliance Securities, Reliance Asset Reconstruction Company, Reliance Home Finance, and Reliance Commercial Finance are also on the block. Reliance Home Finance (RHFL) and Reliance Commercial Finance were earlier sold to Mumbai-based financial company Authum Investment by Indian lenders but the RBI did not clear the sale and the administrator later put both companies on the block under the bankruptcy process.

According to Authum’s plan, lenders were to receive Rs 2,887 crore, along with the cash on RHFL’s books -- Rs 1,800 crore against its debt of Rs 12,000 crore. For Reliance Commercial Finance, they were offered Rs 1,600 crore against a debt of Rs 9,000 crore.

The Reserve Bank of India superseded the board of Reliance Capital in November last year. The RBI appointed Nageswara Rao as the administrator to start the bankruptcy proceedings against the company after it defaulted on bank loans worth Rs 26,800 crore as of March 2021. In December, the Mumbai Bench of the National Company Law Tribunal (NCLT) ordered the bankruptcy proceedings.

In February this year, the administrator had invited EoIs for sale of Reliance Capital. The Anil Ambani family stake in Reliance Capital is down to 1.51 per cent as of December 2021 from 47.3 per cent in March 2019 after banks invoked pledged shares of the promoters which were given as collateral to lenders.

In its annual report for FY21, Reliance Capital blamed Care Ratings for its financial woes. Care Ratings, the company said, in a completely biased, unwarranted and unjustified rating action on September 20, 2019, downgraded its entire outstanding debt to default category even though there were no overdue on principal or interest payments to any lender. “The cascading effect of the unwarranted and unjustified rating downgrade led to acceleration, etc, of various facilities by certain lenders and consequential demands for immediate payment of amounts that were otherwise due and payable in a phased manner over the next 8 years till April 2028, as per original terms of lending,” it had said.