Litigations delay asset sale process of debt-ridden Reliance Capital

The sale of assets of Reliance Cap­ital, initiated by the len­d­ers of the Anil Ambani company, has entered the slow lane, with litigation across various courts delaying the process.

The lenders of Reliance Capital had put several assets of the firm, including its insurance ventures, asset reconstruction firm, and securities arm on sale. 

In total, the advisors to the lenders — SBI Caps and JM Financial — had received over 90 EoIs (expressions of interest) for nine key assets of the company but no transaction could be completed because of the ongoing litigation in debt recovery tribunals and other courts.

The sale of Reliance Capital’s assets was initiated by the Committee of Debenture Holders and the Debenture Trustee Vistra ITCL India Ltd, which represented 93 per cent of total debt of Reliance Capital. Reliance Capital had a debt of Rs 26,887 crore on a consolidated level as on fiscal year ended March this year. After the company defaulted on its loans, the lenders started the process of asset monetising but were unable to complete the deals. As of March 31, 2021, the consolidated total assets stood at Rs 64,878 crore, according to the company’s annual report of 2021. 

The company is deriving maximum valuation for its insurance ventures that includes RCap’s 100 per cent stake in Reliance General Insurance Company, which is the fourth-largest private general insurance company with market share of 4.5 per cent and 51 per cent stake in Reliance Nippon Life Insurance Company (RNLI). RNLI is a joint venture with Japan’s largest life insurer, Nippon Life that holds the rest of the stake.

The process to unlock the value of Reliance Capital started on October 31st last year by the advisors and had received good response from both global and local investors. 

The lenders of two the separate listed subsidiaries of Reliance Capital, how­ever, managed to find a buyer for its home finance firm and NBFC arm. Lenders of Reliance Home Finance and Reliance Commercial Financial have selected Authum Investment and Infrastructure as successful bidders for both the companies.