Lenders have approved a ₹9,660-crore resolution plan offered by Hinduja Group-promoted IndusInd International Holdings for Reliance Capital.
However, the resolution of Reliance Capital subsidiaries Reliance Home Finance and Reliance Commercial Finance was initiated before the Reserve Bank of India admitting the parent company Reliance Capital for corporate insolvency. The process was completed outside the purview of the NCLT.
Authum Investment & Infrastructure acquired assets of both finance companies in an out-of-court resolution process. Under the resolution plan, Authum acquired ₹11,540-crore debt of Reliance Home Finance for ₹3,351 crore and the ₹9,000-crore loan book of Reliance Commercial for ₹1,629 crore.
Under the plan, the businesses of Reliance Home Finance were transferred to Reliance Commercial Finance. Consequently, on July 17, Authum passed a resolution to discontinue its housing finance activity and surrender its certification of registration as a housing finance company to the National Housing Bank. The board also approved a proposal to voluntarily liquidate the company. After the sale of a 45.4% stake, Reliance Capital holds 2.47% stake in the company. Following directions from lenders, the administrator sold shares in different tranches – on August 4 (at ₹2.80 each), August 9 (at ₹2.10) and August 10 (at ₹2.00), according to the disclosures made to the exchange.
“The decision to sell Reliance Home Finance shares was the best option before lenders to optimise recovery, particularly since the company approved a plan for voluntary liquidation mid-July,” said an equity market expert.
“However, it would be unfortunate if these shares end up in the hands of retail investors. Clearly, in this case, the market regulator has failed in protecting the interest of retail investors. Ideally, the Securities and Exchange Board of India should have suspended trading of this stock when the board decides to liquidate the company,” he added.
