Reliance Home Finance lenders extend voting; Authum emerges as winning bidder

The lenders of Anil Ambani-led Reliance Home Finance have zeroed in on a potential suitor for the company, even as the official voting process to select the highest bidder was extended by a few days to June 19, two people in the know told CNBC-TV18.

Mumbai-based non-banking finance company, Authum Investment and Infrastructure Limited has emerged as the preferred bidder, with an offer of Rs 2,887 crores to buy the assets of the company, said people in the know. The voting process started on May 31, and was expected to initially end by June 15. However, some lenders sought more time to secure board approvals for the deal, and so the window to cast votes electronically was extended till June 19, according to people directly in the know.

Four bids were put to vote by lenders. Besides Authum, global fund Ares SSG along with its arm Assets Care and Reconstruction Enterprise (ARCE), Avenue capital in a consortium with Arcil, and another Mumbai based home finance company Capri Global are the three other suitors are were in the fray.

“Authum’s offer translates into the highest recovery for us, but we have to wait for the voting to end,” said an executive with a bank with exposure to Reliance Home Finance. However, Authum’s offer is expected to have secured the minimum votes required to be declared the highest bidder already and is likely to be made official once the voting ends.

Authum’s offer of Rs 2887 crores includes both upfront cash payment and a smaller portion in the form of non-convertible debentures (NCDs). Compared to RHF’s debt of about Rs 11,200 crores, Authum’s offer translates into a ~25 percent recovery. Lenders will additionally receive some cash which is on the books of Reliance Home Finance, which will increase recovery.

Since Authum has only bid for the assets of the company, Reliance Home Finance will eventually wind down operations, said a person in the know. “Its not like DHFL, the process is complicated. Eventually, RHF will wind down. There will be a long process where the company will probably get delisted, equity value will become nil,” added this person.

Authum Investment & Infrastructure Ltd was incorporated in 1982 and is listed on Bombay Stock Exchange Limited and Calcutta Stock Exchange Limited, as per the information on the company’s website. It is a registered NBFC carrying on the business of investment in shares and securities.

Bank of Baroda is the lead banker to Reliance Home Finance and is running the process under RBI’s June 7 circular of 2019. BoB Capital Markets, Ernst & Young are acting as advisors in the transaction.

In an emailed response to CNBC-TV18's query on the story, Authum said, "We would like to inform that we have not received any communication from the Lenders in this regard. As per our company policy we don’t comment on speculative news."

CNBC-TV18 has also reached out to Bank of Baroda, this copy will be updated as and when a response is received.