Kotak Fund, Arcil, 4 others among bidders for Reliance Home Finance

Mumbai: Kotak Special Situations Fund (KSS), Asset Reconstruction Company (India) Ltd (Arcil) and Acre ARC are among six bidders that have expressed interest to buy the debt-laden Reliance Home Finance (RHFL), multiple people familiar with the process told ET.

Lenders led by Bank of Baroda (BoB) are seeking buyers for the debt-laden company through an inter-creditor agreement outside the Insolvency and Bankruptcy Code (IBC).

“Asset reconstruction companies are taking the lead in bids since a majority of loans by this company are to retail investors through affordable home loans, small builders or loans against properties which will require use of the power of the Sarfaesi Act to recover the advances as retail loans are not covered by IBC,” said one of the persons cited above.

KSS has partnered with its group ARC Phoenix, while Arcil has teamed up with its single largest shareholder, New York-based distressed fund Avenue Capital.

Other bidders include Acre ARC, which has teamed up with Singapore-based SSG Capital that owns 49% stake in the company. Mumbai-based Invent ARC and New Delhi-based Alchemist ARC have also expressed interest to participate in the bidding process. Also in the fray is Authum Investment and Infrastructure.

Individual investors could not be contacted immediately.

Lenders are following up on three separate tracks to recover loans from the Anil Ambani-led financial services companies that also include Reliance Commercial Finance and holding company Reliance Capital.

Earlier this month, ET had reported that top global distressed investors, including JC Flowers, Blackstone Group, Oaktree Capital, Kohlberg Kravis Roberts (KKR) and Bain Capital, have expressed interest in buying either parts or the whole of Reliance Capital.

Lenders are hopeful of finding a buyer for RHFL before the end of the fiscal year.

“We have got good interest with about six bids so far. Some bidders needed time…After we get the detailed binding bids, we will evaluate them and then put them to vote. We hope to finish the process by the end of the fiscal,” said a second person involved in the process.

Bidders have to give a ₹10-crore guarantee to qualify for the process. BoB Capital Markets, the investment banking arm of Bank of Baroda, and consultancy firm EY are helping the lenders with the process.

Total dues to lenders as of September 2020 are about ₹7,730 crore. The total loan book as of the start of the fiscal was about ₹14,000 crore, a majority of it to small borrowers.
“With the kind of interest we have seen we expect a haircut of about 60%. But with the recovery in some interest from the ongoing fiscal expected to come to us, we expect some more money to come in. All in all, we are positive about recovering some money from this asset,” said the second person cited above.

Bidders are wary of any unknowns in the financials of the company.

“This is a large complex asset and because it is mostly retail loans, we will need more feet on the ground to recover which will be a challenge. We will have to closely look at the books before deciding the value for this asset,” said a person interested in the company.