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Reliance Asset Reconstruction Company, a part of Reliance Capital, intends to double its total Assets Under Management (AUM) to ₹4,000 crore within the next three years.
The Anil Ambani company is also close to acquiring a stressed credit card portfolio in the next couple of months.
To double its AUM, Reliance ARC is banking on bad loans in the retail sector, while some select assets in the wholesale space would be a windfall. In the retail segment, the company is active in MSMEs and retail loan portfolios.
“The non-performing assets (NPAs) in the MSME sector is growing and in our business, we are more skewed towards secured debt, as only 25 per cent of our portfolio is unsecured. If we get some stressed assets in wholesale, we’ll grow faster. However, pricing is the key and it needs to be return on equity (RoE) accretive,” Ravindra Rao, ED and CEO at Reliance ARC told BusinessLine .
In the MSME sector, the ARC is scouting for distressed assets in manufacturing and ancillary sectors such as steel, automobile, plastics and fabricators, among others.
On the proposed takeover in the credit card segment, Rao said: “This is in line with the retail strategy and we are expecting to add one or two of this asset class of about ₹20-25 crore.”
Reliance ARC, now a 10-year-old company, will also raise about ₹60-75 crore of debentures in tranches over the next 4-5 months. This would be long-tenor monies that would be used to acquire retail portfolios.
“We will raise funds from capital markets through non-convertible debentures (NCDs) and market linked debentures (MLDs), with the first tranche of it expected in month itself. We are in negotiations,” said Rao.
Reliance Capital owns 49 per cent stake in Reliance ARC. The remaining 51 per cent stake is held by Corporation Bank and Indian Bank (23 per cent amongst themselves); billionaire George Soros’ through his company Dacecroft, and New York-based Blue Ridge (9.5 per cent each); while GIC of India owns the remaining 9 per cent.
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