Reliance Home Finance Limited (RHFL), a part of Anil Ambani’s Reliance Group, has received acquisition bids from six companies including a joint offer from US-based Avenue and ARCIL, an asset reconstruction company (ARC). Suitors can bid for the entire company (without the wholesale books), retail portfolio, or RHFL business and shareholdings. However, only two out of six bids are valid.
Sources reveal that only Avenue-ARC and Authum Investment & Infrastructure Limited, a listed non-banking finance company (NBFC), filed bids compliant with binding conditions and mandatory bid bond price of Rs 10 crore.
Other four companies including Invent, Alchemist, Kotak Special Situations Fund (KSSF), and Asset Care and Reconstruction Enterprise Limited (ACRE) failed to meet the terms stated by RHFL. Furthermore, KSSF and ACRE have included exclusivity clauses as suitors along with two months’ additional time.
Reacting to this in the meeting held on December 17, RHFL decided to offer an extension for new submission of bids as per the necessary conditions till January 31, 2021. While they mentioned the decision as a way to accommodate the four bidders, the two fair suitors did not take the news well.
Reports said that the conditions of the bid were informed in advance and multiple extensions have already been granted in the acquisition deal. Owing to this, Avenue-ARC and Authum alleged a lack of transparency from RHFL and threatened to walk out of the negotiations. BoB Capital Markets (BoB Caps) and Ernst & Young (EY) are managing the resolution proceedings.
According to the regulatory filing in March, RHFL defaulted on a loan repayment worth Rs 40.08 crore. It is obligated to pay Rs 200 crore for the loan at 9.15 interest rate within seven years. That said, RHFL currently holds over Rs 700 crore cash in hand, but in liquid mutual fund investments.
Other Reliance Capital assets involved in bidding war feature Reliance Cap, Reliance General Insurance, Reliance Nippon Life Insurance, Reliance Securities, Reliance Health, and Reliance Arc.