Reliance, Bharti Airtel, 2 others bid for 3 Anil Ambani group companies

11 offers submitted for RCom, Reliance Telecom and Reliance Infratel.

Business Standard : Four companies, including Mukesh Ambani’s Reliance group and Bharti Airtel, on Monday collectively submitted 11 bids for three Anil Ambani group companies, which are up for sale as going concerns as part of the Insolvency and Bankruptcy Code (IBC) process.

The three companies for sale are Reliance Communications (RCom), Reliance Telecom (which holds the spectrum), and Reliance Infratel (which controls the tower and fibre assets). RCom also owns real estate and enterprise businesses.

The bids were opened by the committee of creditors, which held a meeting that continued until late night on Monday in Mumbai. It will meet again on Friday to discuss and possibly finalise the winning bids for the three companies

The value of the financial bids as well as which companies they have bid for, however, could not be ascertained.

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The two other bidders include Varde Partners and Delhi-based U V Asset Reconstruction Company (UVRCL). The latter had earlier won its sole bid for the Aircel group (which was also under the IBC) for Rs 150 crore. However, it is unclear as to whether UVRCL will eventually bring in a telecom or infrastructure partner to join in later. A Reliance Jio spokesperson did not respond to a query and an e-mail to UVARCL remained unanswered.

Under the current regulatory rules, Reliance Jio (which is not a listed entity) acquiring RCom (a listed entity) would require the Mukesh Ambani firm to merge with the latter. However, based on public pronouncements, this is not a possibility — Mukesh Ambani had made it clear that he will take Reliance Jio public through an IPO some time. Sources say that one other alternative would be to delist RCom, as then there would not be any regulatory issues in a merger between the two unlisted companies. Another alternative would be to float a special purpose vehicle to buy the firms.

Bharti Airtel had already given a bid on November 13, the earlier deadline for the bids. But the RP on the request of Reliance had extended the bid deadline by 10 days. The telco protesting against the extension had decided to withdraw its previous bid.

While Bharti Airtel spokesperson did not respond to a query, in its earlier offer it had made a conditional bid for the spectrum. The bid, it said, include that the overall consideration will primarily be by way of the deferred spectrum payables to the government being passed on to the company on terms and schedules applicable to such deferred payments.

Anil Ambani to sell BIG FM for Rs 1,050 cr to Jagran's Music Broadcast

MBL will initially acquire a 24% equity stake of RBNL through a preferential allotment for a total consideration of Rs 202 crore.

Anil Ambani-led Reliance Group’s Reliance Capital and Reliance Land will divest the entire equity stake in Reliance Broadcast Network (RBNL) to Jagaran Prakashan-owned Music Broadcast (MBL).

RBNL operates 58 radio stations across the county under the brand name BIG FM Radio, while MBL operates radio stations under Radio City (39 stations).

MBL will initially acquire a 24 per cent equity stake of RBNL through a preferential allotment for a total consideration of Rs 202 crore and, thereafter, subject to the receipt of regulatory approvals, it will acquire all of the remaining equity stakes held by Reliance Capital and Reliance Land in RBNL at a enterprise value of Rs 1,050 crore.

MBL will acquire 40 of BIG FM's 58 stations, while the remaining 18 will be sold to other buyers, talks for which are in the final stages, reveal company sources. These 18 stations have an overlap with the MBL’s stations, and hence are not included in the deal.

Reliance Capital will receive an estimated Rs 150 crore from the disposal of these stations assets of RBNL which do not form part of the transaction with MBL, in accordance with the regulations. The deal will cut Reliance Capital’s outstanding debt by an estimated Rs 1,200 crore. The transaction is expected to close in the first quarter of FY21.

Amit Bapna, CFO, Reliance Capital, said: “Together with the stake sale in Reliance Nippon Asset Management for Rs 6,000 crore and other ongoing monetisation plans, we expect Reliance Capital’s debt to reduce by around Rs 12,000 crore (nearly 70%) in FY20.”

EY India is acting as the exclusive investment banker to the transaction, and Phoenix Legal is acting as legal advisors to Reliance Capital group.

Business Standard

Explained: The rise of India's new billionaires and the fall of the old

A new breed of self-made entrepreneurs is vaulting into the ranks of the wealthy, offsetting billions lost by debt-burdened industrialists and members of the country's old dynasties.

India is going through one of the greatest periods of wealth creation -- and destruction -- all at the same time.

A new breed of self-made entrepreneurs is vaulting into the ranks of the wealthy, offsetting billions lost by debt-burdened industrialists and members of the country’s old dynasties. The changes are set to help India’s ultra-rich population grow at the world’s fastest pace.

It’s a shift shaped partly by a debt-fueled expansion that left businesses from power generation to airlines with $190 billion in soured loans.

Over the past few years, Prime Minister Narendra Modi’s government has cracked down on delinquent borrowers, and India’s banks moved to seize their assets, a dramatic change for a country where the wealthy once enjoyed almost complete protection.

While old business clans continue to dominate India’s rich lists, a tenfold expansion in its economy since its opening in the 1990s has spawned new tycoons in fields like technology.

The number of billionaires in India more than doubled to 119 between 2013 and 2018, according to Knight Frank. And the country will lead the global growth in ultrahigh net worth individuals, with its numbers rising 39 percent to 2,697 by 2023, the researcher estimates.

"The business environment has improved over the years," said Charles Dhanaraj, a professor at the Fox School of Business at Temple University in Philadelphia.

"The availability of venture capital and private equity has changed the opportunity space for promising businesses. So we should see more of these startups and scaleups in the coming years."

Business Standard

Where politicians invest: Mutual funds, RIL, and even Kingfisher Airlines

Rahul Gandhi has disclosed equity holding in Young Indian and investments in several mutual funds.

Fixed deposits and tax-free bonds seem to be among the most favoured financial investments for the political leaders fighting the Lok Sabha polls, while mutual funds and stocks also adorn the portfolios of many and some even have got shares of long-defunct firms like Kingfisher Airlines.

Shares of Mukesh Ambani-led Reliance Industries Ltd (RIL), the country’s most valued company with a market capitalistion of over Rs 8.82 trillion, can be found in the portfolios of several leaders, while stocks and mutual fund units of the firms from younger brother Anil Ambani-led Reliance Group are also a common sight, as per disclosures made in election affidavits of the contestants.

However, some top leaders including Prime Minister Narendra Modi have no stock market or mutual fund exposure at all and their financial savings are limited to deposits in banks, tax-free bonds, insurance policies and instruments like National Savings Certificate.

The direct equity investments for a few are limited to unlisted companies, including those owned by their families.

BJP President Amit Shah has disclosed a long list of listed and unlisted shares in his name and in the name of his spouse. The listed shares in his name, totalling over Rs 17.5 crore, include companies from Aditya Birla Group, Bajaj, L&T, Tata and both Reliance groups, as also several PSUs.

Congress chief Rahul Gandhi has disclosed equity holding in Young Indian and investments in several mutual funds. The portfolio of his mother and senior party leader Sonia Gandhi includes equity shares of Young Indian and Maruti Technical Services Pvt Ltd and mutual fund units of HDFC, Kotak, Motilal Oswal and Reliance MF.

Nationalist Congress Party’s Supriya Sule, daughter of veteran leader Sharad Pawar, has got unlisted shares worth over Rs 1 crore and listed shares worth over Rs 6 crore, besides some mutual funds. The listed shares include those of Adani Group firms, the two Reliance groups, several Tata firms and even Kingfisher Airlines as also of some other companies from the erstwhile UB Group, including United Spirits which was sold by defaulter businessman Vijay Mallya to global liquor giant Diageo Plc. Kingfisher shares have long been delisted from the stock exchanges, though they quoted at above Rs 300 apiece once. The stocks eventually slipped below Rs 1 and trading was eventually suspended in 2014-end after mounting troubles for the erstwhile luxury airline had led to its closure.

Business Standard

How Anil Ambani could arrange funds needed to comply with the SC order

Reliance Communications, and its chairman Ambani, could use the Rs 394 crore received in I-T refunds, but they would still have to raise another Rs 177 crore.

Holding Reliance Communications (RCom) Chairman Anil Ambani and two of the company’s directors guilty of contempt of court, the Supreme Court on Wednesday directed RCom to pay within four weeks Rs 453 crore of the Rs 571 crore it owes telecom equipment maker Ericsson. A failure to do so could land Ambani and the other two in jail for three months.

The Court was hearing three contempt applications that Ericsson had filed against Ambani and others for not clearing its dues.

How will RCom make the payment to comply with the court order? It could utilise the Rs 394 crore of cash that it has received in income-tax refunds in the past few weeks.

The company already deposited in the court Rs 131 crore (net of tax, Rs 118 crore) received from an income-tax refund two months ago.

ALSO READ: SC holds Anil Ambani guilty of contempt; orders RCom to pay Ericsson

The company had requested the court to be allowed to make a part payment of its dues to Ericsson, but the foreign telecom company had rejected the offer and sought a full payment.

Two weeks ago, RCom received Rs 129 crore in a second I-T refund and kept it in a State Bank of India escrow account. According to another I-T order, the company is to get another refund of Rs 134 crore, which, according to sources, should come by next week.

All of these I-T refunds, totalling Rs 394 crore, would still leave a gap of Rs 177 crore. To arrange that, Ambani would have to look at other options. He might look at real estate assets that RCom owns through a subsidiary across the country, including the Dhirubhai Ambani Knowledge City (DAKC), which is valued at Rs 15,000 crore. RCom’s 100 per cent subsidiary GCX also has a cash reserve of $100 million. But real estate deals could take a lot of time to materialise. Considering that, Ambani and RCom might have budget for all factors as they go about finding an answer to where the remainder of the funds would come from.

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