Reliance AIF seeks two-year extension for redemption of 5 realty investments

Mumbai: Troubles in the reality sector after the note-ban shocker in 2016, coupled with the liquidity crisis in the non-banking financial sector in 2018, have forced Reliance AIF Management Company to seek a two-year extension till March 2021 in a scheme involving five debt issues which it had subscribed to.

Reliance AIF had invested in NCDs of five real estate companies, three of which are based in Bengaluru and the other two in Hyderabad and the Northern markets.

The Anil Ambani group company has already returned over 90 per cent of the capital commitments on the Reliance Yield Maximiser AIF Scheme I, under which it had raised a capital commitment of Rs 717.8 crore in 2014.

A late evening query sent to the company remained unanswered.

Industry sources, however, said the troubles are universal and other fund houses have also sought similar extensions.

Under the scheme, Reliance AIF was supposed to invest the money in non-convertible debentures and realty projects and to be returned in 54 months with a 12-month extension.

“Over the past two years, there have been a series of legal, regulatory measures and policy changes in quick succession which have affected the real estate market in the country,” the company said in a letter to investors, a copy of which was reviewed by PTI.

It went on to mention the demonetisation, introduction of GST and installing a realty regulator (Rera) as the factors which have made the going difficult.

Commenting on the liquidity troubles emanating due to the NBFC crisis, it said, “over the past three months, many NBFCs are holding back on funding fresh proposals and in many cases even committed disbursements to their existing projects have been withheld. In some cases, even home loans disbursements have been stopped/slowed down by NBFCs.”

The company explained that timing of the events has coincided with most part of the tenure of the scheme and the maturity of the scheme.

“This has impacted a few of the NCDs in the portfolio,” it said, citing the example of part or full exits approved by NBFCs for two of the portfolio investments have been put on hold since last three months due to the NBFC crisis.

The letter mentions that it exited 11 investments over the last few years, the scheme still has six more investments running. It has paid out Rs 629 crore in 56 payouts to the investors, which is 90 percent of the capital contribution, the letter claims.

“In the best interest of the investors, the proposal to revise the tenure and extend the tenure of the scheme by additional 24 months to March 2021 has been approved by the board of Reliance AIF management company,” the letter said.

Asking investors to vote on the same, it said approval of three fourths of the unitholders is necessary in order to extend the scheme.

It said all the recourses have been adopted by the company to recover its dues, including legal recourse, and will continue to do the same during the period of extension.

The company will stop charging management fee from the investors starting March 2019, it added.