Sale of Reliance Capital assets: SBI Life and Apollo join the race, nearly 70 offers received to date

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New Delhi, Reliance Capital’s (RCAP) Expression of Interest (EOI) for asset monetization received a huge response with 60 offers received. SBI Life and Apollo are among 10 new bidders who have submitted expressions of interest in Reliance Capital’s assets, bringing the total number of bids to 60.

December 1 was earlier the deadline for the submission of EOIs. Over 60 different offers have been received with SBI Capital Markets Limited and JM Financial Services Limited, the advisers to the lenders. Later, the bid submission date was extended until December 17.

Over eight bidders bid on all of RCAP’s assets as is. The most important of these are Oaktree, JC Flower and several ARCs. For Reliance General Insurance, wholly owned by RCAP, there are 18 bidders and among them are Chryscap, JC Flower, Blackstone, KKR, CVC Capital Partners and Bain Capital.

For Reliance Nippon Life Insurance, in which RCAP holds 51% control, received 16 offers, including Bain Capital, NIIF, Arpwood Partners, Dabur Investments, Bandhan Bank and Multiple asset management among others.

For Reliance Securities, there are eight bidders, including Bain Capital, Religare Broking, Edelweiss Securities and other ARCs.

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For Reliance ARC, there are six bidders, including Bain Capital, International Asset Reconstruction Company, and other ARCs.

For Reliance Health, there are eight bidders – Blackstone, Bain Capital, Arpwood Partners and other ARCs.

There are also several bidders for RCAP’s participation in the e-commerce activities of ICEX and Paytm.

The process of monetizing the assets of Reliance Capital, to unlock the value of its underlying business and release RCAP debt, was launched on October 31, 2020.

The monetization process being carried out under the aegis of the Debentureholders’ Committee and the Trustee of the Vistra ITCL India Ltd Debentures – which represents 93% of the total outstanding debt of Reliance Capital.

Expressions of interest have been invited for all or part of RCL’s participation in the following subsidiaries and key assets, individually or in any combination thereof. This includes a 100% stake in Reliance General Insurance Company Limited (RGI). It has a paid-up capital of Reliance General Insurance is 252 crore as of September 30, 2020. It is the 4th largest Private general insurance company with a market share of 4.5% in March 2020 in the General Insurance category. It has shown consistent growth in its assets under management year over year with an investment portfolio of 12,315 crore as of September 30, 2020.

The company has done its best even during the COVID period with gross direct premium income of 4,501 crore in the first six months of fiscal year 20-21. It has a solid distribution network of 134 branches with an agency strength among the largest of 46,742 as of September 30, 2020 across the country.

Tenders have been launched for a 51% stake in Reliance Nippon Life Insurance Company Limited (RNLI). The paid-up capital of Reliance Nippon Life Insurance is ₹ 1196 Cr. as of September 30, 2020. RNLI is a joint venture with Japan’s largest life insurer, Nippon Life, which owns 49% of the shares. It is the 10th largest Private sector insurer (in terms of Individual WRP) and among the largest non-bank companies with a network of 717 offices.

It saw a sharp turnaround in performance in fiscal year 19-20 with after-tax profit of 35 crore and 75% (12% CAGR) growth in intrinsic value over the past four years.

It has an impressive claims settlement rate of 98.1% in fiscal year 2019-20 and a higher solvency ratio of 207% (compared to regulatory requirements of 150%).

As of September 30, 2020, assets under management were 21,912 crore and an individual premium market share of 2.20% among private insurers.

Tenders have been launched for a 100% stake in Reliance Securities Limited – a brokerage and distribution company offering services in all asset classes including equities, commodities, derivatives, currencies, corporate mutual funds, bonds and FDs.

A 100% stake in Reliance Financial Limited – RBI registered NBFC, engaged in financing, money lending, capital market related financing activities, a 49% stake in Reliance Asset Reconstruction Limited which manages a portfolio of ₹ 1,996 crore is also offered. September 30, 2020.

A 20% stake in Indian Commodity Exchange is also being offered. The other key shareholders of ICEX are Central Warehousing Corporation, MMTC Limited, Indiabulls Housing Finance Limited, Indian Potash Limited and Bajaj Holdings and Investments. ICEX is a derivatives exchange regulated by SEBI.

There is also a 100% stake in Reliance Health Insurance Limited. Other private equity investments such as Naffa Innovations Private Limited, Paytm E-Commerce Private Limited. The activities and key subsidiaries of RCL are doing well and operations will continue as normal. Management, professional team, client and partners will not be affected by the asset monetization program offered by RCAP.

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