Reliance Infrastructure and Reliance Power, which are companies, under the Anil Ambani group plan to raise ₹1,043 crore through shares from Reliance Commercial Finance. The ownership of Reliance Commercial Finance has been transferred to Authum Investment & Infrastructure. This decision is a result of a litigious debt resolution process and aims to increase equity stakes and settle outstanding dues in a friendly manner.
Two Anil Ambani group firms, Reliance Infrastructure and Reliance Power, are raising a combined sum of ₹1,043 crore through preferential share allotment from Reliance Commercial Finance.
This financial infusion comes from Reliance Commercial Finance, which is now wholly owned by Authum Investment & Infrastructure, following its acquisition through a non-litigious debt resolution process last October.
Under the proposed allocation, Reliance Commercial Finance intends to invest ₹891 crore in Reliance Infrastructure and ₹152 crore in Reliance Power, as disclosed in stock exchange filings.
As a result of this transaction, Reliance Commercial Finance’s equity stake in Reliance Infrastructure will be 11%, and in Reliance Power, it will be 2%. Notably, Reliance Commercial Finance is a subsidiary of Reliance Home Finance, itself a subsidiary of Reliance Capital—another company associated with Anil Ambani—which is currently undergoing corporate insolvency proceedings.
In the period preceding 2020, Reliance Infrastructure and Reliance Power had furnished guarantees for loans taken by Reliance Commercial Finance and Reliance Home Finance. Authum, now the owner of Reliance Commercial, exercised these guarantees as part of the resolution process. To address the outstanding dues with Authum, Reliance Infrastructure and Reliance Power proposed a conversion of debt into equity.
As per stock exchange disclosures, the board of Reliance Infrastructure has greenlit the issuance of 44.3 million preferential shares at ₹201 per share, while Reliance Power’s board has approved the issuance of 75.9 million preferential shares at ₹20 per share to Reliance Commercial.
Reliance Infrastructure acknowledged that Authum had “invoked its claim and required the company to pay its dues towards outstanding guarantees along with interest, penal interest, costs, charges, and other expenses.” To preclude litigation, both parties amicably settled these dues, resulting in a crystallized debt of ₹891.26 crore. Following the share allotment, Reliance Infrastructure will settle obligations totaling ₹4,456 crores for an amount of ₹891.2 crore, as stated in a stock exchange filing.
The restructuring process for Reliance Commercial and Reliance Home Finance took place extrajudicially around June 2020, predating the corporate insolvency proceedings initiated by the Reserve Bank of India against their parent company, Reliance Capital. As a consequence, these two entities were not part of the sale of Reliance Capital, which was acquired by the Hinduja Group’s IndusInd International Holdings for ₹9,660 crore.
The resolution plan, sanctioned by the Supreme Court on March 3 and effective from October 14, 2022, involved Reliance Commercial Finance acquiring the entirety of Reliance Home Finance’s business through a slump sale on a going concern basis.
At present, shareholders of Reliance Infrastructure and Reliance Power are individually voting on the proposal for preferential share allotment to Reliance Commercial, as indicated in disclosures to the exchange.
Media reports from March 31, 2023, indicate that Authum procured a debt of ₹11,540 crore from Reliance Home Finance for ₹3,351 crore. Furthermore, Authum acquired Reliance Commercial’s ₹9,000 crore loan book for ₹1,629 crore.
