ACRE offers to buy Reliance Capital bonds from LIC with 70% haircut

15 Nov 2022 , 09:17 AM

An ET report stated that Ares SSG Capital-backed asset reconstruction company (ARC) has made a binding offer to Life Insurance Corporation of India (LIC) to buy the insurer’s Rs3,400 crore bond investment in Anil Ambani’s failing lender Reliance Capital.

According to the report, a Swiss challenge auction has been sparked by the offer made by Assets Care & Reconstruction Enterprise (ACRE).

The report stated that the ARC has offered the life insurer 30 paise of the outstanding primary balance (OPB). In order to purchase the debt from Reliance Capital, ACRE had to pay 26-28% of OPB to Axis Bank and HDFC a year prior.

The Administrator has received offers from the bidders of Reliance Capital (RCap) that are consistent with ACRE’s binding offer.

Reliance Capital’s debt has been the subject of three attempts by LIC to sell it over the previous 18 months, but this attempt is more likely to succeed because the financial institution has announced a Swiss auction.

For the sale of RCap bonds, LIC selected IDBI Capital Markets as the process consultant. By November 25, they were seeking expressions of interest. The first opportunity to match the counteroffer will go to the anchor bidder ACRE.

Since bundling this debt with the 16 accounts placed up for sale in July 2021, LIC has been looking for a bidder for its Reliance Capital bonds. However, due to a discrepancy between the offers received and expectations, it decided against moving forward with the loan sale.

It once more requested ARC proposals in July 2022, this time for the bonds worth 3,400 crores issued by Reliance Capital. It did not proceed with the sale despite receiving three binding bids. LIC once more requested bids for Reliance Capital by September 5 in the final week of August.

Aditya Birla Mutual Fund, a late entrant, expressed interest in making an offer for Reliance Nippon Life Insurance, in which the Nippon Group of Japan owns a 49% stake, last month.

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