Life Insurance Corporation of India’s efforts to sell non-convertible secured debentures (NCDs) of Reliance Capital Ltd (RCap) with a principal outstanding of ₹3,400 crore, may hit a wall with concerns being raised about a potential violation of insider trading norms.

Reliance Capital is undergoing the Corporate Insolvency Resolution Process (CIRP) and the Reserve Bank of India has appointed Nageshwar Rao as the administrator. As part of CIRP, several prospective bidders, who are interested in acquiring RCap, have submitted their EOIs and are conducting due diligence.

Classified as ‘insiders’

The potential bidders have been given access to privileged and confidential business information including unpublished price sensitive information, which is not otherwise available in the public domain. “The said prospective bidders are, therefore “insiders” within the meaning of SEBI (Prohibition of Insider Trading) Regulation, 2015,” Infrastructure Watchdog, an NGO, said in a communication to LIC. “Additionally, members of the Committee of Creditors (CoC) also have access to sensitive information,” it added.

The NGO said LIC and IDBI Capital Markets & Securities Ltd should ensure that "insiders" are prohibited from participating in the process for the sale of NCDs. If this request is upheld then as many as 54 companies, including some marque investors and some of the top banks who are lenders to RCap, may not be able to buy the NCDs from LIC.

The invitation for expression of Interest for the sale of NCDs was issued by IDBI Capital Markets & Securities Ltd on behalf of Life Insurance Corporation of India.

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