Creditors sold a total 5.5bn shares in four companies – Reliance Power, Reliance Infrastructure, Reliance Communications and Reliance Capital – leading to a 3-8% point reduction in founders’ stakes in these firms, according to filings.
Another blow was dealt to the fragile investor sentiment for the Anil Ambani group after its wireless unit, Reliance Communications, stated last Friday that 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, which held Reliance Power shares, stated it sold the assets as the borrowers “defaulReliance 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% each. Reliance Capital has tumbled 34%.”
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 September 30, even if their value erodes. The accord followed the 27% slump in the flagship Zee Entertainment Enterprises on January 25.