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Authum Emerges As Highest Bidder For Reliance Home Finance

RHF resolution is the only successful resolution post Altico in March 2020, under June 7, 2019 direction of RBI on Prudential Framework for Resolution of Stressed Assets.

Photo Credit : Shutterstock

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Authum Investment and Infrastructure Ltd has emerged as the highest bidder for Reliance Home Finance (RHF), a group company of the debt-ridden Anil Ambani-promoted Reliance Group, with about Rs 2,900 crore offer.

Sources said lenders led by Bank of Baroda would receive Rs 2,587 crore or 90 per cent upfront and the remaining Rs 300 crore within a year.

In a regulatory filing, Authum said the company had submitted a bid of Rs 2,911 crores (which includes Rs 24 crore as deferred interest) to financial creditors subject to the terms and conditions of the bid document which has been approved by the lenders at their meeting held on June 19, 2021.

The voting that started on May 31 and concluded on June 19 saw participation from over 91 per cent of the lenders by value, sources said, adding lenders have voted in favour of Authum's plan over other bids.

In this connection, the lead bank on behalf of lenders of RHFL under the Inter-Creditor Agreement (ICA) has issued a letter of intent (LOI) dated June 19, 2021 in favour of the company, the filing said.

The LOI is subject to the terms and conditions stated in the LOI including statutory and regulatory approvals, it added.

'We believe that the acquisition of RHF, a reputed lending franchise to affordable housing and housing segments make our company a significant player in diversified financial services,' it said.

Authum is a domestic NBFC with around 15 years of presence and over Rs 1,500 crore networth as of December 31, 2020.

The resolution plan of Authum with assets under management (AUM) of approx Rs 2,200 crore as was selected as it offered Highest Net Present Value (NPV) and has fewer and reasonable conditions, sources said.

The bid by the NBFC scored highest in terms of ease of implementation and found to be comprehensive for all the stakeholders including RHF employees and customers, sources said.

Though the plan has been selected considering that overwhelming majority, sources said, few remaining lenders are yet to give their nod due to delay in their internal approvals.

The other bidders were ARES SSG (global fund with over USD 8 billion under management) along with Assets Care & Reconstruction Enterprise Ltd, Avenue Capital (global fund with over USD 9.5 billion under management) jointly with ARCIL and Capri Global Capital Limited – a domestic NBFC.

RHF resolution is the only successful resolution post Altico in March 2020, under June 7, 2019 direction of RBI on Prudential Framework for Resolution of Stressed Assets.

Retail disbursements of Reliance Home Finance had plunged amid tightening liquidity following the collapse of Infrastructure Leasing & Financial Services (IL&FS) in 2018, and significant debt repayments during the September 2018 to February 2019 period.

With the resolution, the debt of Reliance Capital Ltd (RCL) would come down by about Rs 11,200 crore or more than 25 per cent of outstanding.

As part of future diversification strategy, the company in the regulatory filing said, 'we are extremely excited about the growth potential in the affordable housing, loan against properties, retail, consumer finance, SME and MSME lending along with strong digital play. We believe that these segments are major drivers of the national economy with significant unfulfilled demand and have the potential to touch the lives of millions in the country.

As part of its core investment strategy and principles of value preservation and long term value creation, Authum will leverage RHF's existing customer base, employees, processes, licenses, knowledge, infrastructure, branch network and digital platform, it said.

Subject to the terms of the LOI, Authum is committed to the well-being of the employees of RHF, hiring new talent, to ensure the continuity of services to customers, it added. 

(PTI)