Key obstacle removed with Yes Bank, Axis green signal to RCap's asset sale

The two banks are jointly owed Rs 1,575 cr and had objected to the sale unless their dues are paid. Yes Bank recently moved into Anil Ambani group HQ in Santa Cruz, Mumbai as part of debt settlement

An important hurdle to the sale of Reliance Capital's assets has been removed with Yes Bank and Axis Bank removing the red flag account status of Reliance Capital (RCap) as per the Reserve Bank of India (RBI) guidelines

Both banks jointly have a debt exposure is Rs 1,575 crore and had objected to RCap's asset sale plans unless their dues were paid. Just a few days ago, Yes Bank moved into Anil Ambani group headquarters in Santa Cruz, Mumbai as part of a debt settlement deal with the Ambani group companies.

Yes Bank, with a secured debt exposure of Rs 987 crore, and Axis Bank, with Rs 588 crore, had classified Reliance Capital as a red flag account in January last year and in November 2019 respectively.

The account had been red-flagged under the RBI Master Directions of 2016 on Classification and Reporting of accounts by Commercial Banks and select FIs, 2016.    

The debenture holders are selling Reliance Capital assets and attracted over 70 bidders including global firms like Blackstone, Oaktree, Brookfield, Apollo Global, Bain Capital, CVC Partners, ChrysCapital, JC Flower, and various strategic domestic players.

The assets for sale include Reliance Capital-owned assets including Reliance General Insurance Company, Reliance Nippon Life Insurance Company, Reliance Securities Limited, Reliance Financial Limited, Reliance ARC, Reliance Health Insurance, Indian Commodities Exchange, and private equity investments like Paytm Ecommerce and Naffa Innovations.  

JM Financial is running the asset sale process of the company on behalf of its lenders.

Various Anil Ambani group companies including Reliance Infrastructure and Reliance Power are getting fresh fund infusion from the promoter, the Anil Ambani family, and Varde Partners.