Reliance Capital, the finance company owned by Anil Ambani, has divested a 45% stake in its listed subsidiary Reliance Home Finance for Rs 54 crore in an open market transaction. This strategic move is expected to enhance the recovery prospects for lenders. As part of the ongoing corporate insolvency proceedings, Reliance Capital has been actively working towards restructuring and resolution.
This action comes as a result of lenders approving a resolution plan presented by IndusInd International Holdings, which is a subsidiary of the Hinduja Group. The resolution plan amounts to Rs 9,660 crore and aims to provide a comprehensive path forward for Reliance Capital.
Reliance Capital's subsidiaries, Reliance Home Finance and Reliance Commercial Finance, have been undergoing resolution independently, before the initiation of the corporate insolvency proceedings for the parent company. The resolution process was carried out outside the scope of the National Company Law Tribunal (NCLT) and was conducted in line with regulatory requirements.
The assets of both finance companies were acquired by Authum Investment & Infrastructure through an out-of-court resolution process. Under this arrangement, Authum took over the debt of Reliance Home Finance amounting to Rs 11,540 crore for Rs 3,351 crore, and the loan book of Reliance Commercial Finance, valued at Rs 9,000 crore, for Rs 1,629 crore.
As part of the resolution strategy, the operations of Reliance Home Finance were merged with Reliance Commercial Finance. Subsequently, Authum discontinued its housing finance activities and voluntarily surrendered its certification as a housing finance company to the National Housing Bank. The decision to sell the 45.4% stake in Reliance Home Finance was a strategic step to optimize recovery, especially considering the voluntary liquidation plan that was approved in mid-July.
The divestment process was conducted in tranches, adhering to the directions from lenders and administrators. Shares were sold on different dates, including August 4, August 9, and August 10. It's worth noting that the sale of shares should ideally be carried out to safeguard the interests of retail investors and ensure regulatory oversight.
This development emphasizes the importance of effective regulatory supervision and coordination to protect all stakeholders' interests, including retail investors, The episode sheds light on the complexities of corporate resolution and the need for a well-coordinated approach to safeguard the financial ecosystem.
