IOB | Jana SFB : Reliance ARC buys distressed loans from IOB, Jana SFB

Reliance Asset Reconstruction Company has begun actively acquiring distressed loans from banks even as its parent company Reliance Capital is undergoing an insolvency proceeding, two people aware of the development told ET.

In two separate transactions, Reliance ARC acquired stressed loan portfolios from Jana Small Finance Bank and Indian Overseas Bank in the last week of March, the sources said. Both deals were concluded under a structured deal involving upfront payment and issuances of security receipts to the banks, they said.

Jana Bank, Indian Overseas Bank and the administrator of Reliance Capital did not respond to ET’s request for comment.

In all, the Anil Ambani group ARC acquired a principal loan portfolio of ₹273 crore from the two banks under two separate uncontested Swiss challenge auction.

It acquired a principal loan portfolio of ₹141 crore from Indian Overseas Bank at a reserve price of ₹84.8 crore under a structured deal of 25:75. Here, the ARC paid 25% of the transaction value upfront and the balance will be paid in the form of security receipts that will be redeemed as it recovers money from borrowers.

From Jana Small Finance Bank, the ARC purchased ₹132 crore loan at a reserved price of ₹98.6 crore under a 15:85 structured deal where 15% of the transaction value is paid upfront and the remaining in security receipts. IOB‘s and Jana Bank’s portfolios comprised loans to small and medium entrepreneurs.

Anil Ambani-promoted Reliance Capital was admitted to insolvency proceedings by the Reserve Bank of India last December and has attracted 54 expressions of interest, according to a stock exchange notice.

Entities that have shown interest in acquiring the ARC business include Adani Finserve, Ares SSG Capital, Brookfield Pvt Capital, Arpwood Partners, Cosmea Financial Holdings, Edelweiss Alternative Asset Advisors, Piramal Consortium, Motilal Oswal Financial Services, International Asset Reconstruction Company, J C Flowers & Company, Yes Bank, Globe Fincap and True North Fund VI.