News: Soros buys 11 per cent in Reliance vulture fund

'(HT 14/03/2007) Mumbai - George Soros Quantum Fund is picking up an 11 per cent 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 Rs 100 crore.

Quantum, which acquired a 4.82 per cent 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 company tracing 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 and derivatives.

Reliance ARC plans to issue 21 million shares, 21 per cent of the enhanced equity share capital. The company plans to issue another 6.2 per cent 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 per cent 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 securities assets in India and outside. It will acquire, hold, manage, assign or dispose off 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 Rs 20,000 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 per cent stake in the company.