Tata and Adani are queueing up to take over Anil Ambani’s debt-laden company

Anil Ambani’s debt-ridden firm Reliance Capital has evoked interest from several quarters, including the 150-year old Tata Group, coal billionaire Gautam Adani’s group, and Yes Bank.

Promoted by the Reliance Anil Dhirubhai Ambani Group (ADAG), it is one of India’s largest diversified financial services companies and has reportedly received 54 bids in all till now, news agency Press Trust of India has reported.

Reliance Capital is currently under corporate insolvency resolution. Last November, the Reserve Bank of India superseded its board in view of “payment defaults and serious governance issues.”

Like the other firms under the ADAG umbrella, Reliance Capital is an apparent victim of a financial crunch caused by Anil Ambani’s constantly-deteriorating wealth. From $42 billion in 2008, the net worth of Mukesh Ambani’s younger brother had reduced to almost nothing by 2020.

Over the years, his firms have accumulated gigantic debts.

The RBI-appointed administrator had invited expressions of interest for Reliance Capital’s resolution in February. The last date for submission was March 11 but that got extended to March 25, reportedly on the request of a few potential buyers.

Anil Ambani’s debt-ridden Reliance Capital

The firm is the third large non-banking financial company (NBFC) against which India’s central bank has initiated bankruptcy proceedings under the Insolvency and Bankruptcy Code in recent times. The others are Srei Group NBFC and Dewan Housing Finance Corporation.

In September 2021, the Anil Ambani-led firm informed its shareholders that its consolidated debt was 40,000 crore rupees. It reported narrowing its consolidated net loss to Rs1,759 crore in the quarter ended December 2021.

The company’s share has been mostly rising on BSE since January following talks of bidding, insolvency proceedings. Today (March 28), around the time of publishing of this report at 10.40 am, it was trading at Rs14.90 (less than $1) — up 4.93% from yesterday’s closing.

Why Reliance Capital is a hot buy

Most of the bidders are keen on buying the entire company, but some are interested in only one or two of its many subsidiaries such as Reliance General Insurance, Reliance Nippon Life Insurance, Reliance Securities, Reliance Asset Reconstruction Company, Reliance Home Finance, and Reliance Commercial Finance.

Experts attribute the company’s popularity to the “residual value recovery” of its shares. “It holds share value in its subsidiaries like the insurance business, broking, ARC, and investments,” Mumbai-based market analyst Ambareesh Baliga had earlier told Quartz.

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