Reliance Power, led by Anil Ambani, settles bank dues, hits 5% upper circuit

Reliance Power Shares Rise: Anil Ambani’s Reliance Power saw its shares soar 5% to reach the upper circuit after the business successfully paid off its bank debt.

Anil Ambani’s Reliance Power settles bank dues, surges 5%

On Wednesday, Reliance Power’s shares saw a notable increase of 5%, reaching a day’s high of Rs 23.83 on the BSE. This noteworthy rise came after news broke that the corporation managed by Anil Ambani had successfully settled its obligations with ICICI Bank, Axis Bank, and DBS Bank.

Additionally, it was reported that the parent firm, Reliance Infrastructure, is actively attempting to settle its debt to JC Flowers Asset Reconstruction firm, which amounts to Rs 2,100 crore.

According to The Economic Times, a senior executive from a commercial bank stated, “Reliance Power aims to become a debt-free entity by the end of this fiscal year. The only outstanding debt will be the working capital loan from IDBI Bank.” Another lender, as per the same report, indicated that the three lenders collectively held approximately Rs 400 crore and managed to recover nearly 30-35 percent of their principal loans.

Anil Ambani’s Resurgence

While Mukesh Ambani, his brother, continues to reach new heights, Anil Ambani has faced challenges and earned the reputation of being the black sheep of the family. Despite enduring difficulties over the years, signs of a potential resurgence are emerging for him.

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Reliance Power’s Debt Settlement

Reliance Power, under Anil Ambani’s leadership, recently resolved its debts with three major banks – ICICI Bank, Axis Bank, and DBS Bank. Moreover, insiders familiar with the situation suggested that Reliance Infrastructure, the parent corporation, is actively addressing outstanding payments totaling Rs 2,100 crore owed to JC Flowers Asset Reconstruction Company.

Standstill Agreement

An agreement between Reliance Infrastructure and JC Flowers ARC, initially set until March 20, 2024, was later prolonged to March 31, 2024. Under this standstill agreement, JC Flowers ARC refrains from taking legal action against Reliance Infrastructure until March 31, allowing the company time to secure funds.

Equity Infusion by Reliance Power

According to a stock market statement on March 13, Reliance Power obtained Rs 240 crore in equity from VFSI Holdings. One of the mentioned bankers stated that the money were probably used to pay off the banks’ obligations. The purchase was facilitated by Varde Partners’ affiliate, VFSI Holdings, a worldwide asset management.

The role of Yes Bank

Yes Bank, which was once Anil Ambani’s principal lender, gave JC Flowers ARC control over its impaired loan portfolio, which totaled Rs 48,000 crore and included loans to Reliance Power and Infrastructure.

Financial Indebtedness

Reliance Power revealed that, as of December 31, 2023, their total financial indebtedness was Rs 765 crore.In April 2023, Reliance Power settled loans with two lenders – JC Flowers ARC and Canara Bank – according to exchange disclosures.

Equity Allocation and Investments

In September 2022, Reliance Power allocated 200 million equity shares to VFSI Holdings at Rs 15.55 per share. VFSI recently exercised its warrant conversion rights, leading to an infusion of Rs 240 crore. Additionally, Reliance Commercial Finance, acquired by Authum Investment & Infrastructure, invested Rs 1,043 crore in both Reliance companies in August this year.

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Stock Performance

Over the past 12 months, Reliance Power’s stock has yielded impressive returns, with a growth of 129%. However, it has underperformed in 2024 so far, with negative returns of 1.46% year-to-date.

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