News: Anil unleashes asset recast firm

(DNA 27/07/2006) Mumbai - In its quest to build a financial powerhouse, Anil Ambani’s Reliance ADA Group demonstrated its interest in the nascent asset reconstruction sector when it snapped Rajendra Kakker from Asset Reconstruction Company (ARCIL) to head its newly formed Reliance Asset Reconstruction Company.

Reliance Capital is the non-banking finance arm of the Reliance ADAG.

It is floating an asset reconstruction company - also called “vulture” firms - which will buy stressed assets from the system, and nurse them back to health.

Rajendra Kakker, former managing director and CEO of Asset Reconstruction Company (India) Ltd (Arcil), will head the venture and has been appointed as president. Reliance Capital will team up with Corporation Bank, Indian Bank, and General Insurance Corporation for the purpose. Reliance Capital will hold a 49% stake in the company, while the other three partners will hold 15% apiece.

Reliance Capital’s new vehicle is likely to acquire stressed assets at a steeper discount, as it plans to pay cash upfront.