Tag: Reliance Commercial Finance

Authum Investment to buy Reliance Commercial Fin in ₹1,629-cr deal

Banking & Finance

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Authum Investment and Infrastructure is set to acquire Anil Ambani-led Reliance Commercial Finance (RCFL) on completion of the resolution process under the Reserve Bank of India (Prudential Framework for Resolution of Stressed Assets) Directions, 2019.

Lenders have approved the ₹1,629 crore bid placed by Authum in the meeting held on Thursday and letter of intent was issued in favour of the company’s bid.

The resolution will result in overall debt reduction of Reliance Capital by over Rs 9,000 crore.

Authum’s RP chosen for Reliance Commercial Finance

RCFL offers a wide range of products including loan against property, MSME/SME loans, infrastructure financing, education loans and micro financing.

Authum Investment and Infrastructure, a Non-Banking Finance Company has over 15 years of presence and net worth of about ₹2,360 crore as of June-end.

Authum is currently managed by a team of professionals with significant investment experience in domestic, public and private equity. Authum’s investment strategy is long term value creation through investments in listed companies, providing growth capital to unlisted companies, acquisition of financial assets, real estate investments and debt investments.

Further, the proposed acquisition of Reliance Commercial Finance strengthens business portfolio and enables to develop a single platform across multiple financial products and services in the NBFC sector, it said.

The acquisitions offer a growth opportunity with a blend of commercial finance, MSME/SME, affordable housing, loan against properties, retail and consumer finance along with strong digital and technology play to generate higher yields.

Voting on Reliance Commercial Finance’s debt resolution underway

These segments are major drivers of the economy with significant unfulfilled demand, it said.

Authum is geared up to meet its financial commitment to the lenders of RCFL under the LoI.

The company will leverage on RCFL customer base, employees, processes, licenses, branch network and digital platform with an aim to create a niche lending platform, it said.

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Authum Investment likely winner for Reliance Commercial Finance

Personal Finance

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After the resolution of RCF, parent firm Reliance Capital may reduce total debt of Rs 9,000 crore from its books, sources said.

By Ankur Mishra

Lenders to Reliance Commercial Finance (RCF) are understood to have voted in favour of Mumbai-based NBFC Authum Investment and Infrastructure’s bid, sources close to the development told FE. Authum’s Rs 1,585-crore bid implies around 20% recovery for financial creditors on a total exposure of Rs 7,688 crore. This is the second Anil Ambani group firm which is likely to be acquired by Authum Investment and Infrastructure after lenders in June declared the NBFC winner for acquiring Reliance Home Finance.

The Alpana Dangi-promoted Authum Investment is in the business of investing in shares and securities. The company, which has a net worth of over Rs 2,400 crore, is also engaged in financing activities, according to its website.

After the resolution of RCF, parent firm Reliance Capital may reduce total debt of Rs 9,000 crore from its books, sources said.

The lenders had earlier extended the inter-creditor agreement (ICA) for RCF till July 31, 2021 for resolution. According to June 7 circular of the Reserve Bank of India, lenders need to extend the time period of the pact if an account has not been resolved within 180 days of signing of the ICA. The lenders had signed the ICA to resolve Reliance Commercial Finance in July 2019.

According to the website of RCFL, it has been re-branded as Reliance Money, and has assets under management worth Rs 11,000 crore. The company is a 100% subsidiary of Reliance Capital. RCFL offers financial products, including small and medium enterprise loans, loans against property, infra financing, agriculture loans and supply chain financing.

The net loss of Reliance Commercial Finance widened to Rs 1,417 crore during the March quarter, compared with Rs 852 crore in the corresponding quarter last year. The total income declined 12% year-on-year to Rs 293 crore.

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Authum’s RP chosen for Reliance Commercial Finance

Banking & Finance

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Lenders to Reliance Commercial Finance are understood to have selected Authum Investment and Infrastructure’s resolution plan of ₹1,585 crore as the successful bid.

According to sources, Authum’s plan had the highest net present value and received over 80 per cent of the votes.

The recovery for lenders is estimated to be ₹1,240 crore.

Reliance Commercial Finance also has additional cash and cash equivalent of over ₹250 crore as on June 30, 2021, which will be distributed along with plan proceeds, sources said.

Reliance Commercial Finance or Reliance Money is a 100 per cent subsidiary of Anil Ambani controlled Reliance Capital. It had a debt of about ₹9,017 crore. It offers small and medium enterprises loans, loans against property, infrastructure financing, agriculture loans, supply chain financing, micro-financing, vehicle loans and construction finance.

Authum Investment and Infrastructure is a registered NBFC involved in investments in shares and securities and has a net worth of over ₹2,400 crore as on June 30, 2021.

Earlier its bid of ₹2,911 crore for Reliance Home Finance had also been selected as the successful resolution plan by lenders.

The resolution of Reliance Commercial Finance is expected to help reduce the overall debt of Reliance Capital by over ₹9,000 crore.

Led by Bank of Baroda, lenders to Reliance Commercial Finance had in August 2020 initiated the resolution plan and had sought bids for the two companies. The process was run by Deloitte Touche Tohmatsu LLP as the resolution advisor.

Voting had started on June 7, 2021 and concluded on Thursday.

Apart from Authum, other bidders whose plans had been taken up for voting included UV ARC in consortium with Hawk Capital, Invent ARC and Alchemist ARC.

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Karnataka Bank declares loan to Reliance Home Finance as fraud, BFSI News, ET BFSI

Banking & Finance

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Private sector Karnataka Bank has declared accounts of Reliance Home Finance and Reliance Commercial Finance a fraud with combined loan outstandings of over Rs 160 crore to the lender.

The bank has reported to the Reserve Bank regarding frauds in the credit facilities extended earlier to two listed companies — Reliance Home Finance with loan outstanding of Rs 21.94 crore and Reliance Commercial Finance Rs 138.41 crore as fraud, Karnataka Bank said in a regulatory filing.

The lender said it has been dealing with Reliance Home Finance since 2015 and with Reliance Commercial Finance since 2014.

With regard to loan to Reliance Home Finance, as many as 24 lenders were part of a multiple banking arrangement, while in case of Reliance Commercial Finance as many as 22 lenders were part of the loan arrangement.

Karnataka Bank said its share in the multiple banking arrangement to Reliance Home Finance is 0.39 per cent and to that of Reliance Commercial Finance is 1.98 per cent. The lender said it has made provision up to 100 per cent in both the cases against the loan given to the companies.

“Both the accounts were classified as NPA (non-performing assets) and have been fully provided for. As such, there is no impact on the financials of the bank going forward,” Karnataka Bank said.

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Voting on Reliance Commercial Finance’s debt resolution underway

Banking & Finance

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Voting on the resolution plan for debt-ridden Reliance Commercial Finance has started and is likely to be completed by June 25.

“Banks have begun voting for the successful resolution plan of Reliance Commercial Finance on June 7 and it is expected to be completed by June 25,” said a person familiar with the development.

The resolution would help address the ₹9,017 crore debt of Reliance Commercial Finance, which is a 100 per cent subsidiary of Anil Ambani-controlled Reliance Capital.

Final bidders

The four final bidders whose plans have been taken up for voting include Authum Infrastructure and Investment, UV ARC in consortium with Hawk Capital, Invent ARC and Alchemist ARC. Bank of Baroda is the lead banker under the Inter Creditor Agreement for the resolution.

The debt resolution of Reliance Home Finance is also underway and the voting is expected to be completed by June 15.

Lenders had initiated the resolution of both the companies under the June 7, 2019 circular of the Reserve Bank of India on Prudential Framework for Resolution of Stressed Assets Directions 2019 .

Reliance Commercial Finance, which has been re-branded as Reliance Money, offers small and medium enterprises loans, loans against property, infrastructure financing, agriculture loans, supply chain financing, micro financing, vehicle loans and construction finance.

The total financial indebtedness of Reliance Capital stood at ₹20,916.78 crore including accrued interest up to April 30, 2021, as per a recent regulatory filing. The total amount of outstanding from the banks and the financial institutions was ₹721.9 crore.

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