IDBI Capital Markets, the insurance company’s process adviser for the sale of bonds, has invited binding bids from asset reconstruction companies by the evening of September 5, the people said. This is the third attempt by the country’s largest life insurance company to sell its Reliance Capital debt.
LIC did not respond to ET’s request for comment till press time Monday.
Last June, as reported by ET, LIC invited offers for its Reliance Capital exposure by July 11. Three ARCs, including Ares SSG-backed Assets Care & Reconstruction Enterprise (ACRE), submitted firm bids. However, LIC did not respond to the offers it received, the people said.
In July 2021, it invited offers for 16 accounts amounting to Rs 8,091 crore including Reliance Capital bonds, but failed to close any deal due to the differences over pricing.
“LIC expects a recovery of 45%, which is unrealistically high,” said a third person aware of the matter. The last two trades for Reliance Capital debt between two lenders and an ARC indicate that recovery could be around 27-28%.
Axis Bank and HDFC Ltd had separately sold their Reliance Capital exposure to ACRE last fiscal year for 27-28 paise on the rupee, as reported by ET on December 1.
Reliance Capital’s administrator, Nageshwara Rao Y, has admitted claims of Rs 23,666 crore from financial creditors and extended the deadline to submit firm resolution plans to August 29.
The highest admitted claim is from LIC at Rs 3,485 crore, followed by a separate claim of Rs 1,539 crore from LIC Pension and Group Scheme, according to disclosures on the company’s website.
Since Reliance Capital has more than 20 finance-related subsidiaries, the administrator has provided two options. An applicant can bid for the entire company or any of the eight clusters of its assets. These clusters include Reliance General Insurance, Reliance Nippon Life Insurance, Reliance ARC, Reliance Home Finance and Reliance Commercial Finance.