LIC seeks buyers for Rs 3,400 crore RCap bonds

Mumbai: Life Insurance Corporation of India (LIC) is seeking buyers for secured bonds worth ₹3,400 crore issued by Reliance Capital, currently undergoing insolvency proceedings, in an effort to present a clean book to an investor base that has widened since its recent IPO, said two people aware of the development.

IDBI Capital Markets (IDBI Caps), the insurance company's process advisor for the sale of the bonds, has invited expressions of interest (EoIs) from asset reconstruction companies (ARCs) by the evening of July 11. The EoIs will be followed by an auction, although IDBI Caps has not specified any details of this in the notice inviting EoIs.

LIC didn't respond to queries.


Based on the last two trades between two lenders and an ARC, it is estimated that LIC will recover about 27-30% of the ₹3,400 crore bond amount, said one of the two people cited above. Axis Bank and HDFC Ltd had separately sold their Reliance Capital exposure to Assets Care and Reconstruction Enterprise (ACRE), an ARC, in the last fiscal year for 27-28 paise on the rupee, as reported by ET on December 1.

Second LIC Attempt to Sell RCap Bonds
HDFC sold term loans worth Rs 524 crore while Axis Bank sold Rs 100 crore of term loans and Rs 490 crore of bonds to ACRE between September and December last year. Reliance Capital, a core finance company promoted by Anil Dhirubhai Ambani, has been undergoing insolvency proceedings since early December last year.

LIC, which raised Rs 20,560 crore in a public offer last month, had gross NPAs to the extent of 7.78%, or about Rs 35,130 crore, of its book on March 31, 2021, according the latest available annual report. Since listing, the shares have fallen about 40%.

This is the second attempt by LIC to sell Reliance Capital bonds. In July last year, it had invited offers for an Rs 8,091 crore distressed assets portfolio comprising 16 companies, including bonds of Reliance Capital. The sale did not go through due to differences between the corporation and bidders on pricing the assets.

Reliance Capital's administrator Nageshwara Rao Y has admitted claims worth Rs 23,666 crore from financial creditors and set a June 30 deadline for receiving firm resolution plans. 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.

Adani Finserve, Brookfield, Bandhan Bank, ACRE, a consortium led by Piramal, IndusInd International Holding, TPG Asia, Yes Bank and Varde Partners-backed VFSI Holdings are among 54 applicants to have submitted EoIs for Reliance Capital.

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. Another cluster combines four financial services companies: Reliance Securities, Reliance Financial Ltd, Reliance Wealth Management Ltd and Reliance Commodities Ltd. The remaining two clusters are an investment in real estate and investments in other businesses.