Representational image
Laborers sit outside a Reliance Industries construction site at the Bandra Kurla Complex in Mumbai, India (representational image)| Dhiraj Singh/Bloomberg
Text Size:

Mumbai: Lenders dumped shares of Anil Ambani group companies they held as collateral after their market value plummeted about 126 billion rupees ($1.8 billion) this month, adding to the litany of woes plaguing the Indian billionaire.

Creditors sold a total 5.5 billion shares in four companies — Reliance Power Ltd., Reliance Infrastructure Ltd., Reliance Communications Ltd. and Reliance Capital Ltd. — leading to a 3-to-8 percentage-point reduction in founders’ stakes in these firms, according to filings.

The fragile investor sentiment for the Anil Ambani group was dealt another blow after its wireless unit, Reliance Communications, said last Friday it plans to file for bankruptcy. The selloff spread to other group firms, eroding the value of the shares pledged as collateral. IDBI Trusteeship Services Ltd., which held Reliance Power shares, said it sold the assets as the borrowers “defaulted on the terms.”

Reliance Communications has seen its market value drop by more than half this week, while shares of Reliance Power and Reliance Infrastructure have crashed almost 60 per cent each. Reliance Capital has tumbled 34 per cent.

The share pledge problem has also engulfed other Indian companies. Media tycoon Subhash Chandra’s Essel Group signed a pact with its lenders that protects the group’s borrowings against shares from being counted as default until 30 Sept, even if their value erodes. The accord followed the 27 per cent slump in the flagship Zee Entertainment Enterprises 25 Jan. –Bloomberg 

 

Read ThePrint’s razor-sharp editorial take on the news of the day. In just 50 words