Reliance Home Finance Resolution: Lenders Zero In On A Potential Winner

Lenders to Reliance Home Finance have zeroed in on a potential bidder for the mortgage financier’s assets, even though a final vote is pending.

An Rs 2,887-crore offer by Authum Investment & Infrastructure Ltd. is likely to receive lenders’ nod soon, two people with direct knowledge of the matter said. The people spoke on condition of anonymity.

Out of the Rs 11,000-crore loan book of Reliance Home Finance, Rs 8,000 crore was extended to Reliance Group companies owned by Anil Ambani. The remaining loan book, of approximately Rs 3,000 crore, included home loans to retail customers, the first of the two people cited earlier said.

Against the loans extended to Reliance Group firms, Authum Investment has proposed to offer Rs 130 crore to the lenders, while the remaining Rs 2,750 crore is to be paid for the retail home loan book, the first person said.

To be sure, the bidder will only buy the assets of Reliance Home Finance under its plan and won’t take over ownership of the housing financier.

Authum Investment is a non-bank lender in the business of investment in shares and securities and also financing activities, according to details available on its website. It was incorporated in 1982 and listed on the BSE.

According to the people cited earlier, Authum Investment and Ares SSG were two bidders looking to buy the entire loan book of the housing financier. Two other bidders—Asset Reconstruction Company of India Ltd. and Capri Global—were bidding for just the retail component of Reliance Home Finance’s loan portfolio, they said.

At present, lenders see the Authum bid as superior as the cash-in-hand being offered is higher. While Ares SSG is offering an amount similar to Authum, the payout is partly in the form of security receipts as the deal is being routed via asset reconstruction company ACRE, in which SSG owns 49%.

Responding to queries by BloombergQuint, Authum Investment said that it has not received any communication from the lenders yet.

"With reference to your queries, we would like to inform that we are bound by the non disclosure agreement, hence cannot reveal the specifics of our bid," a spokesperson for Authum Investment said in the email response.

Emails sent to BoB Capital Markets, EY and Anil Ambani-owned Reliance Group on Tuesday evening did not elicit an immediate response.

Lenders to Reliance Home Finance have held five rounds of negotiations with bidders, before the current vote, the second person cited earlier said.

Bank of Baroda leads the group of lenders who had signed the inter-creditor agreement. Other major lenders to Reliance Home Finance include State Bank of India and Yes Bank Ltd. BoB Capital Markets and EY are advisors on the process.

According to the people cited earlier, 35 banks and financial institutions which had signed the inter-creditor agreement are set to complete voting on the resolution plan and the fund distribution scheme by June 19. Following this, the institutional as well as retail non-convertible debenture owners will vote for the plan, the two people cited earlier said.

Lenders led by Bank of Baroda have been trying to resolve the stress in the housing financier for more than a year. The lenders had sought expressions of interest from bidders in July 2020. The resolution is taking place under the Reserve Bank of India’s June 2019 circular.