ACRE offers to buy Reliance Capital bonds from LIC at a 70% discount

An ET report said that Ares SSG Capital-backed asset reconstruction company (ARC) has made a binding offer to Life Insurance Corporation of India (LIC) to buy the insurer’s 3,400 crore bond investment in Anil Ambani’s defaulting lender, Reliance Capital.

According to the report, a Swiss challenge auction was triggered by the bid made by Assets Care & Reconstruction Enterprise (ACRE).

The report says the CRA offered the life insurer 30 paise of the Outstanding Primary Balance (OPB). In order to buy Reliance Capital’s debt, ACRE had to pay 26-28% of the OPB to Axis Bank and HDFC a year before.

The Administrator has received offers from Reliance Capital (RCap) bidders which are consistent with ACRE’s firm offer.

Reliance Capital’s debt has been the subject of three attempts by LIC to sell it in the past 18 months, but this attempt is more likely to succeed as the financial institution has announced a Swiss auction.

For the sale of the RCap bonds, LIC selected IDBI Capital Markets as its process consultant. On November 25, they were looking to show interest. The first opportunity to match the counter-bid will go to lead bidder ACRE.

Since the consolidation of this debt with the 16 accounts put up for sale in July 2021, LIC has been looking for a bidder for its Reliance Capital bonds. However, due to a mismatch between the offers received and the expectations, he decided not to proceed with the sale of the loan.

It again requested ARC proposals in July 2022, this time for bonds worth 3,400 crore issued by Reliance Capital. He did not proceed with the sale despite three firm offers. LIC again requested bids for Reliance Capital by September 5 of the last week of August.

Aditya Birla Mutual Fund, a late entrant, expressed interest in making an offer for Reliance Nippon Life Insurance, in which the Nippon Group of Japan has a 49% stake, last month.

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