With a bid of Rs 2,900 crore, Authum Investment and Infrastructure Ltd has emerged as the highest bidder for Reliance Home Finance (RHF), a group company of the debt-ridden Anil Ambani-led Reliance Group.
In early trade on June 21, the share prices of Reliance Home Finance and Authum Investment & Infrastructure increased by 5% and 2%, respectively, after the latter emerged as the successful highest bidder for the acquisition of all assets of Reliance Home Finance.
Authum Investment & Infrastructure’s share price reached a 52-week high of Rs 585.90, while Reliance Home Finance’s share price reached a 52-week high of Rs 5.98.
Bank of Baroda (on behalf of the lenders) has released a Letter of Intent identifying the firm as the victorious bidder in the acquisition of all assets of Reliance Home Finance.
According to sources, lenders led by Bank of Baroda would receive Rs 2,587 crore, or 90%, up front and the balance Rs 300 crore over the next year.
Over 91 percent of lenders by value participated in the election, which began on May 31 and completed on June 19, sources said, adding that lenders voted in favour of Authum’s plan over competing bids.
The company had filed a bid to financial creditors for Rs 2,911 crore (which includes Rs 24 crore in deferred interest) according to the terms and conditions of the bid Document, which was approved by lenders at their June 19, 2021 meeting.
We believe that the acquisition of RHFL, a reputable lending franchise focused on affordable housing and housing segments, will position Authum Investment as a prominent player in diversified financial services, according to the release.
Authum is a domestic non-bank financial company with a history of roughly 15 years and a net worth of around Rs 1,500 crore as of December 31, 2021.
They stated that they chose Authum’s resolution plan because it provided the highest Net Present Value (NPV) and contained fewer and fair criteria.
According to reports, the NBFC’s bid received the highest grade for simplicity of implementation and was found to be comprehensive for all stakeholders, including RHF staff and consumers.
Though the strategy was chosen with the overwhelming majority in mind, sources claimed, a few remaining lenders have yet to approve it due to delays in their internal approval processes.
Other bidders include ARES SSG (a global fund with over USD 8 billion in assets under management) in collaboration with Assets Care & Reconstruction Enterprise Ltd, Avenue Capital (a global fund with over USD 9.5 billion in assets under management) in collaboration with ARCIL, and Capri Global Capital Limited, a domestic non-bank financial company.
RHF resolution is the sole successful resolution strategy post-Altico in March 2020, as per the RBI’s June 7, 2019 directive on the Prudential Framework for Stressed Asset Resolution.
Retail disbursements of Reliance Home Finance had decreased significantly between September 2018 and February 2019 due to tightened cash following the collapse of Infrastructure Leasing & Financial Services (IL&FS) in 2018 and large debt repayments.
With the settlement, Reliance Capital Ltd’s (RCL) debt will be reduced by approximately Rs 11,200 crore, or more than 25% of total debt.
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Bhoi Smrutirekha Dharanidhar