Reliance life and non-life on the block

Mumbai: Reliance Capital has informed stock exchanges that several of its subsidiaries, including Reliance General Insurance and Reliance Nippon Life Insurance, have been put on the block by a committee of debenture holders (CoDH) as part of an asset monetisation process.

The committee was constituted by debenture trustee Vistra ITCL, which has invited expressions of interest from buyers for various subsidiaries. These include Reliance General Insurance, Reliance Securities, Reliance Financial and Reliance Health Insurance, where Reliance Capital holds 100% stake. The insurance companies are expected to be the most valuable among the lot. Also, on the block is the company’s 49% holding in Reliance Asset Reconstruction, 20% stake in Reliance Commodities Exchange and 11% in Naffa Innovation.

The last date for submission of bids is December 1, 2020. The invitation for an expression of interest (EoI) states that bidders can apply for one or more investments on an as-is-where-is and as-is-what-is basis (along with their associated liabilities). An investor who bids for multiple companies, cannot make their bids contingent on the bidder being selected as the successful bidder for all the investments.

Reliance Capital has total debt of around Rs 15,000 crore and most of it is in the form of debentures. “The asset monetisation process is being initiated by Vistra on behalf of the CoDH and in this regard, JM Financial Limited has been appointed by Vistra on behalf of the CoDH as the sole investment banker to co-ordinate the asset monetisation process,” Vistra said in a statement.

The Employee Provident Fund Office (EPFO), Life Insurance Corporation (LIC) and other insurance companies have large investments in Reliance Capital bonds. Lenders are placing their hopes on the sale of the insurance companies for a large part of the recovery. Reliance General has a paid-up capital of Rs 252 crore as of September 30, 2020 and has a market share of 4.5% among private insurers, which places it among the top five. Reliance Nippon Life has a paid-up capital of Rs 1,196 crore as of September 30, 2020 and is among the top 10 private life insurance companies.

Source: The Times of India