George Soros’ Quantum Fund is picking up a 11% stake in Reliance Asset Reconstruction Company Ltd, Mauritius.
The third asset restructuring company wanting to start operations in India has sought regulatory approval to enhance its equity share capital to Rs100 crore.
Quantum, which acquired a 4.82% stake in Reliance Capital last year, will acquire 11 million of the proposed shares that Reliance ARC plans to allot preferentially at a price of Rs 10 each.
The shares will be issued to Dacecroft Ltd, a companytracing its parentage to Quantum Endowment Fund NV. The latter is a limited liability corporation whose principal business is to invest worldwide in equity, debt, currencies, commodities andderivatives.
Reliance ARC plans to issue 21 million shares, 21% of the enhanced equity share capital. The company plans to issue another 6.2% to Blue Ridge Limited Partnership, a New York-based fund managed by Blue Ridge Capital LLC.
Blue Ridge Offshore Master Limited Partnership, a sister fund also owned by Blue Ridge Capital, will pick up another 3.8% of Reliance ARC.
The transactions have been cleared by the Foreign Investment Promotion Board and are awaiting the Reserve Bank of India’s approval, according to sources.
Reliance ARC will reconstruct and securitize assets in India and abroad. It will acquire, hold, manage, assign or dispose of loan assets with or without underlying securities in banks, financial institutions and corporates.
Reliance is the third Indian player to get into asset restructuring. ARCIL, a joint venture between the State Bank of India, ICICI Bank and a clutch of other banks, has been in operation for three years and has acquired stressed assets from banks of around Rs20,000 crore.
The second vulture fund, yet to be operational, is Assets Care Enterprise Ltd (ACE). In January 2006, US-based commodities giant Cargill acquired a 49% stake in the company.