Reliance Capital lenders appoint SBI Caps, JM Financial to sell assets

Move follows default on debt to debenture holders who form 99% of the firm's liability

Lenders to Reliance Capital Ltd (RCL) have appointed SBI Caps and JM Financial to sell the assets of the company after the Anil Ambani-owned firm defaulted on its debt repayment to debenture holders and other creditors.

The debenture holders account for 99 per cent of the borrowing of RCL and have formed the committee of debenture holders (CODH) for debt resolution.

The indebtedness of RCL is Rs 19,806 crore, including its accrued interest up to August 31, 2020, to banks and debenture holders.

Of the amount, the debenture holders’ exposure is around Rs 15,000 crore.

The committee is led by the Employees’ Provident Fund Organisation (EPFO) and Life Insurance Corporation (LIC), which have fast-tracked the sale of RCL’s assets.

The EPFO’s exposure to RCL is estimated at around Rs 2,500 crore.

The expression of interest (EoI) by Vistra, the Trustee, inviting bidders, will be issued this week, said a source close to the development.

When contacted, an RCL spokesperson declined to comment on the matter.

The key assets put on the block include its entire stake in Reliance General Insurance Company, the third-largest private sector insurer, and a 49 per cent stake in Reliance Nippon Life Insurance, a joint venture with Nippon Life, which is among the top five private-sector insurance companies.

RCL also holds 100 per cent in Reliance Securities and 49 per cent in Reliance Asset Reconstruction Company.

The company also holds 100 per cent in Reliance Health, apart from having stake in other private equity and real estate investments.

According to the plan, an entity can bid for the entire shareholding in RCL, individual assets, or any combination of assets as listed for sale.

RCL is not alone in undergoing debt resolution.

In March this year, rating firm CARE had placed Rs 11,726 crore of RCL’s subsidiary Reliance Home Finance (RHFL) in the default category. RHFL said its lenders had entered into an inter-creditor agreement (ICA) for arriving at a debt resolution plan in accordance with the circular dated June 7, 2019, issued by the Reserve Bank of India. But due to litigation in the Delhi High court, debt resolution is delayed.

Reliance Commercial Finance Ltd (RCFL), a wholly owned subsidiary of RCL, is also facing litigation on debt resolution.

As of March 31, 2020, RCFL had assets under management (including the securitised portfolio) of Rs 11,190 crore as against Rs 14,269 crore as of March 31, 2019.