In talks with investors for equity infusion: Reliance Home Finance

Since the IL&FS episode, all categories of lenders in India, including banks, mutual funds have put an almost complete freeze on additional lending to HFCs and NBFCs

Reliance Home Finance Ltd (RHFL) on Friday said it is in discussion with several investors for equity infusion, amid tight financial conditions plaguing the industry for the past few months.

Since the IL&FS episode, all categories of lenders in India, including banks, mutual funds have put an almost complete freeze on additional lending to home finance companies (HFCs) and non-banking financial companies (NBFCs), and have instead only been insisting upon reduction of existing borrowings, it said in a release.

Over this entire period, lenders have been willing to only securitise existing asset polls of HFCs and NBFCs to provide resources for meeting debt servicing obligations, it said.

 

These unprecedented actions lasting for more than 6 months have severely impacted the financial flexibility of almost all HFCs and NBFCs in the country including RHFL.

The company has been affected by a timing mismatch with regard to the ongoing further securitisation or monetisation proposals with banks, and the same has resulted in minor delay on principal repayments aggregating to only Rs 542 crore to around 5-6 banks and limited to only its bank borrowings, it said.

"Given the current challenging and non-supportive environment for the sector, RHFL has decided upon the strategy for the future and has commended discussions with several strategic/PE partners for equity infusion into the business, accompanied with acquisition of complete management control," it said.

The company said its sponsor, Reliance Capital, will continue as a minority financial investors as it sees future long-term upside in the sector, upon restoration and a more supportive and conducive environment.

Further, the company's wholesale loan book will be fully unwound by March 2020 and corresponding borrowings repaid entirely, it said.

On the current financial status of the company, it said the company has completed securitisaton of over Rs 5,500 crore from October 1, 2018, till date and is engaged in active discussions for further securitisation or monetisation of its asset base.

Besides, RHFL is completely "current and regular in servicing interest on its entire debt" as on date.

"RHFL is also completely current and regular on principal repayments on all its capital market borrowings aggregating Rs 7,708 crore," it said.