Promoter stake in ADA group firms falls as lenders invoke pledged shares

Retail, lenders stuck with dud shares; promoter stake in Reliance Infra fell to 5% this September end from 48.4% in March 2018. Reliance Infra's stake in Reliance Power fell to 25% from 75%

The promoter's stake in the listed companies of the Anil Ambani group fell steadily as lenders started invoking the pledged shares following loan defaults.

Statistics collated by this newspaper shows that the promoter stake in Reliance Infrastructure fell to five per cent as on September end this year from 48.4 per cent in March 2018. Reliance Infra’s stake in its subsidiary, Reliance Power fell to 25 per cent in September this year from 75 per cent in March 2018.

The promoters, the Anil Ambani family have agreed to infuse Rs 550 crore into Reliance Infrastructure by way of a preferential allotment of shares thus increasing their stake in the infrastructure company to 25 per cent once the offer is completed. Reliance Infrastructure, in turn, will increase its stake in Reliance Power to 38 per cent after its warrants are converted.

Ambani’s stake in Reliance Infrastructure declined after the lenders invoked the pledged shares and sold the shares in the market. Data shows 72 per cent stake is held by retail and HNIs.

In Reliance Capital, which was superseded by the Reserve Bank of India, the promoter’s stake already fell to 1.5 per cent as on September this year from 52 per cent as on March 2018. It’s the public shareholders, who are now holding 85 percent of shares, who will lose out.

Two other companies which are facing insolvency processes – Reliance Communications and Reliance Naval & Engineering -- also saw a steady decline in promoter’s stake as their financial metrics declined (see chart).

Reliance Communications bankruptcy process is currently pending in the court while lenders are in the final stages of deciding on the highest bidder for Reliance Naval & Engineering.

A month earlier in June, Reliance Power, a subsidiary of Reliance Infrastructure, had announced that it would raise Rs 1,325 crore by issuing preferential allotment of shares and warrants to its parent. Reliance Infra had debt of Rs 14,000 crore as of March this year while Reliance Power had debt of Rs 24,000 crore.