Authum Investment and Infrastructure Ltd will acquire second Anil Ambani group firm Reliance Commercial Finance after lenders approved its resolution plan, according to a person aware of the development.
After several rounds of bidding and negotiations, Authum’s Rs 1,585 crore (around $212.7 million) plan received over 80% vote share of the lenders which have already received Rs 1,240 crore ($166 million) as cash.
“…The company had additional cash and cash equivalent of over Rs 250 crore as on 30 June 2021, which will be distributed along with plan proceeds,” the person said.
This will result in overall debt reduction of Reliance Capital by over Rs 9,000 crore ($1.2 billion).
The process was run by Deloitte Touche Tohmatsu LLP as the resolution advisor and Bank of Baroda as the lead bank.
Last month, Mumbai-based non-banking financial company (NBFC) Authum had also emerged as the highest bidder for Reliance Home Finance.
Set up in 1982, Authum (previously known as Pentium Investments and Infrastructures Ltd) is a Kolkata based non-bank lender majorly owned by Mumbai-based investment firm Mentor Capital.
Authum is into the business of investment in shares and securities and financing activities. It had a net worth of over Rs 2,400 crore as on June 30, 2021.
Reliance Commercial Finance
Reliance Commercial Finance is a wholly-owned subsidiary of Anil Ambani-controlled firm Reliance Capital.
As on March end 2021, its aggregate corporate loan outstanding stood at Rs 4,980 crore.
For the half year and full year ended March 2021, the non-bank lender reported a loss of Rs 1,417 crore and Rs 2,665 crore, respectively. Its accumulated losses as on March end stood at Rs 5,998 crore.
In June 2019, Reliance Commercial Finance signed an inter-creditor agreement under the Reserve Bank of India's “Prudential Framework on Resolution of Stressed Assets”.
Last year, around 13 investors submitted bids for the NBFC, which is undergoing the bankruptcy resolution process, after lenders led by Bank of Baroda invited expressions of interest for the firm.
Besides Authum, domestic and foreign investors including JM Financial ARC, Edelweiss ARC, UGRO Capital and UV ARC and Asset Reconstruction Company (India) Ltd (ARCIL) were in the race for the asset.