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PE firms, ARCs queue up for Reliance Capital’s assets
Photo Credit: Reuters

Blackstone, KKR, Bain Capital, JC Flowers and others have submitted Expressions of Interest (EOIs) for different assets of debt-laden Reliance Capital (RCap), people aware of the development told VCCircle.

Lenders to Reliance group’s financial services company have received over 60 bids, all filed with their advisers SBI Capital Markets Ltd and JM Financial Services Ltd, said one of the persons. 

The deadline for the submission was December 1, 2020. The asset monetisation process by RCap had begun in October.

As many as eight bidders including Oaktree, JC Flowers and multiple asset reconstruction companies (ARCs) have bid for all RCap assets on an as-is-where-is basis.

For Reliance General Insurance, which is 100% owned by RCap, there are 18 bidders including ChrysCapital, JC Flowers, Blackstone, KKR, CVC Capital Partners, and Bain Capital. 

The firm, with an investment book of Rs 12,315 crore as on September-end this year, counts itself as the fourth-largest private-sector general insurance company with a market share of 4.5% as of March 2020. It had a gross direct premium income of Rs 4,501 crore for the first six months of 2020- 21.

Reliance Nippon Life Insurance, in which RCap owns 51% controlling stake, has received 16 bids including those from Bain Capital, National Investment and Infrastructure Fund (NIIF), Arpwood Partners, Dabur Investments, Bandhan Bank, and Multiples Alternate Asset Management. 

Japanese firm Nippon Life holds 49% equity in the insurer. As on September 30, 2020, the AUM (assets under management) was Rs 21,912 crore. Reliance Nippon Life Insurance has an individual premium market share of 2.20% amongst private-sector insurers.

Around 8 bidders including Bain Capital, Religare Broking, and Edelweiss Securities bid for RCap’s 100% owned broking arm Reliance Securities. 

For Reliance ARC, in which RCap owns 49% stake, there are 6 bidders including Bain Capital and Blackstone-owned International Asset Reconstruction Company (IARC). Reliance ARC had a portfolio of Rs 1,996 crore as of September 30, 2020. 

For Reliance Health, a 100% subsidiary of RCap, there are 8 bidders including Blackstone, Bain Capital, and Arpwood Partners.

JC Flowers, Edelweiss, Bain Capital and all others mentioned above did not respond to queries till the time of publishing. Blackstone, KKR and Oaktree declined to comment. Arpwood and Dabur Investments couldn’t be reached.

On talk of bidding for Reliance Nippon Life Insurance, Bandhan Bank said, “Pursuant to licensing conditions, the bank cannot undertake financial services such as insurance and mutual funds, apart from distributing them...”
The bank did not want to say anything about the rest of the assets of RCap.  

Religare said: "Religare Broking has submitted its EoI to explore the opportunity with respect to the asset sale process of Reliance Securities and it has not yet made any formal bid."

There are also multiple bidders for RCap's stake in Indian Commodity Exchange (ICEX) and other PE investments such as Naffa Innovations Private Ltd and Paytm E-commerce Pvt Ltd, the people said.

A week back, RCap defaulted on interest payment on its Rs 690 crore of outstanding loans from HDFC and Axis Bank. 

Separately, lenders to other Anil Ambani companies Reliance Home Finance and Reliance Commercial Finance are running a process to sell the loan book on ‘as is where is’ basis.

Last year, at its annual general meeting in September, Reliance Group’s chairman Anil Ambani announced the winding down of the lending business.

In June last year, its auditors raised several red flags on RCap's fourth-quarter results, including a lack of clarity on related-party transactions and accounting methodology.

RCap’s business includes loans to small and medium enterprises through Reliance Money and to home buyers via Reliance home finance.

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