Big companies in the fray to acquire Reliance Capital

reliance-capital

Indian Market
by 5paisa Research Team Last Updated: 2022-08-08T19:03:14+05:30

Since the NCLT opened bids for taking over the business of Reliance Capital, there has been a keen interest among potential buyers. Some of the big names already in the fray to acquire Reliance Capital include Tata AIG, ICICI Lombard and Nippon Life.

In total, there are more than 54 prominent such prominent Indian and foreign financial companies that are currently in the fray for taking over the profit-making insurance arms of Reliance Capital.

The submission of expression of interest (EOI), which closed on 25th March, has seen some very reputed names in the fray. This includes HDFC’s general insurance arm, HDFC Ergo, Bandhan Financial Holdings, Adani Finserv, Yes Bank, Oaktree Capital, PE firm Blackstone, Brookfield, TPG, Zurich Insurance Group etc. In addition, the list also includes names like Capri Global, Edelweiss Alternatives, JC Flower, Motilal Oswal and UV Multiple Assets.

Potential bidders were given two options. They could either bid for Reliance Capital overall business or they could bid for individual subsidiaries of Reliance Capital. Its subsidiaries include Reliance General Insurance, Reliance Nippon Life Insurance, Reliance Securities, Reliance ARC, Reliance Home Finance etc.

The insurance business has seen the maximum interest. The AMC business has already been sold by the ADAG group to Nippon Group.

Under the extant RBI regulations, the central bank is authorized to supersede the boards of a large NBFC, which could pose a serious systemic risk to the financial system. Accordingly, in November 2021, the RBI had superseded the board of Reliance Capital and had instead appointed Nageswara Rao as the company’s administrator.

Following this, RBI had filed an application with NCLT for initiating insolvency resolution process against Reliance Capital.
 

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In February 2022 this year, the RBI appointed administrator had invited expressions of interest (EOI) for the sale of Reliance Capital.

The original deadline to submit the EOI was 11th March, which was later extended by 14 days till 25th March to enable the bidders to be able to file their latest financials while bidding for Reliance Capital. The financial bids are expected to be firmed up and submitted by the month of May 2022.

Earlier, the other two cases where the RBI had referred the NBFCs to the NCLT to prevent systemic risk were the cases pertaining to IL&FS and Dewan Housing.

While Dewan Housing has already been sold to Piramal group, the IL&FS resolution is still under process. In between the RBI had also superseded the board of SREI group, which finances infrastructure projects, and referred them also the NCLT. That case is still pending. 

Hopefully , Reliance Capital should be able to find willing buyers, especially considering the strong franchise that Reliance Capital still enjoys in the life insurance and the general insurance space. These units are likely to get the maximum bids from potential buyers.

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