Reliance ARC Buys distressed Loans

Reliance Asset Reconstruction company has started acquiring distressed loans from banks even as its parent company Reliance Capital is undergoing an insolvency proceeding as per information available.

1. Reliance ARC acquired stressed loan portfolios from Jana Small Finance Bank and Indian Overseas Bank in the last week of March this year.
2. Both these deals are said to be concluded under a structured deal involving upfront payment and issuances of security receipts to the banks.
3. Anil Ambani group ARC acquired a principal loan portfolio of Rs. 273 crore from the two banks under two separate uncontested Swiss Challenge auction.
4. The company acquired a principal loan portfolio of Rs. 141 crore from IOB at a reserve price of Rs. 84.8 crore under a structured deal of 25:75 wherein the ARC paid 25% of the transaction value upfront and the balance will be paid in the form of security receipts that will be redeemed as it recovers money from borrowers.
5. From Jana Small Finance Bank, the ARC purchased Rs. 132 crore loan at a reserved price of Rs. 98.6 crore under a 15:85 structured deal wherein 15% of the transaction value is paid upfront and the remaining in security receipts.
6. IOB’s and Jana Bank’s portfolios comprised loans to small and medium entrepreneurs.
7. It may be recalled that Anil Ambani promoted Reliance Capital which was admitted to insolvency proceedings by RBI last December and has attracted 54 expression of interest according to Stock Exchange notice.

Further the entities who have shown interest in acquiring the ARC business include Adani Finserve, Ares SSG Capital, Brookfield Pvt Capital, Arpwood Parnters, Cosmea Financial Holdings, Edelweiss Alternative Asset Advisors, Piramal Consortium, Motilal Oswal Financial Services, International Asset Reconstruction Company, JC Flowers and Company, YES Bank, Globe Fincap and True North Fund VI.