Reliance Capital has made a move by selling 45% of its subsidiary, Reliance Home Finance for Rs 54 crore. This sale will help the company in its efforts to recover funds from lenders. After a resolution plan of Rs 9,660 crore was put forth by IndusInd International Holdings, Reliance Capital now holds a small stake of, around 2.5%. It’s worth noting that this resolution process took place outside the jurisdiction of NCLT and has resulted in optimized restructuring outcomes.
In a strategic move aimed at bolstering recovery for lenders, Reliance Capital has successfully divested a 45% stake in its listed subsidiary, Reliance Home Finance, for a sum of Rs 54 crore in the open market. This transaction leaves Reliance Capital, formerly owned by Anil Ambani, with a mere stake of under 2.5% in Reliance Home Finance.
The substantial Rs 9,660-crore resolution plan, endorsed by lenders and proposed by the Hinduja Group-affiliated IndusInd International Holdings, has received formal approval for the restructuring of Reliance Capital.
Notably, the progression in resolving Reliance Capital’s subsidiaries, Reliance Home Finance and Reliance Commercial Finance, was set in motion prior to the Reserve Bank of India’s admission of Reliance Capital to corporate insolvency. The resolution process was completed independently of the purview of the National Company Law Tribunal (NCLT).
Facilitating an out-of-court resolution, Authum Investment & Infrastructure successfully acquired the assets of both finance entities. Under the comprehensive resolution strategy, Authum effectively acquired Reliance Home Finance’s debt amounting to Rs 11,540 crore for a sum of Rs 3,351 crore, along with the substantial Rs 9,000-crore loan portfolio of Reliance Commercial, secured for Rs 1,629 crore.
In accordance with the devised plan, the operational activities of Reliance Home Finance were seamlessly integrated into Reliance Commercial Finance. Consequently, on July 17, Authum took a momentous decision to halt its housing finance operations and voluntarily relinquished its housing finance company certification to the National Housing Bank. The board additionally sanctioned a proposal for the company’s voluntary liquidation.
Following the successful divestment of the 45.4% stake, Reliance Capital’s stake in the subsidiary has been pared down to a mere 2.47%. The administrator adhered to lender directives and executed the share sale in multiple tranches, specifically on August 4 (at a rate of Rs 2.80 each), August 9 (at Rs 2.10), and August 10 (at Rs 2.00), as per the disclosed information to the exchange.
Commenting on this strategic move, an expert in the equity market remarked, “The decision to liquidate Reliance Home Finance shares stands out as the most optimal choice for lenders to maximize recovery, especially considering the company’s endorsement of voluntary liquidation in mid-July.”
Nevertheless, concerns have arisen regarding the potential acquisition of these shares by retail investors. The equity market expert expressed disappointment in the event that these shares find their way into the hands of retail investors. The sentiment was underscored by a belief that market regulatory measures, particularly those of the Securities and Exchange Board of India (SEBI), should have involved the suspension of trading of this stock at the point of the company’s liquidation resolution.
