Insurance sector regulator Irdai has given conditional approval to Hinduja Group firm IndusInd International Holdings Ltd (IIHL) for the takeover of debt-ridden Reliance Capital.
“We are happy to acknowledge the receipt of approval from IRDAI yesterday (May 10) on the auspicious occasion of Akshay Tritiya. The approval is subject to certain ‘regulatory, statutory, and judicial’ clearances/compliances,” an IIHL spokesperson said in a statement.
IIHL stands committed to working towards obtaining the same as soon as possible and aims to close this transaction by the NCLT’s stipulated date of May 27, the spokesperson said.
“We take this opportunity to thank all stakeholders, including regulators and the administrator for their timely support,” it said.
IRDAI approval is crucial for the transfer of insurance businesses of Reliance Capital — Reliance General Insurance and Reliance Nippon Life Insurance — to the IIHL.
Reliance Capital is one of the promoters of Reliance General Insurance and Reliance Nippon Life Insurance.
The National Company Law Tribunal on February 27, 2024, approved Hinduja Group firm IndusInd International Holdings’ ₹9,650-crore resolution plan for Reliance Capital.
In November 2021, the Reserve Bank superseded the board of Reliance Capital on governance issues and payment defaults by the Anil Dhirubhai Ambani Group company. The central bank had appointed Nageswara Rao Y as the administrator, who invited bids in February 2022 to take over the company.
Reliance Capital had a debt of over ₹40,000 crore, and four applicants had initially bid with resolution plans.
However, the committee of creditors rejected all four plans for lower bid values and a challenge mechanism was initiated in which IIHL and Torrent Investments participated.
In June 2023, the Hinduja Group firm was selected by the committee for its bid of ₹9,661 crore upfront cash. Reliance Capital’s cash balance of an additional ₹500 crore would also go to the lenders.
The deal to acquire the Anil Dhirubhai Ambani group’s financial services arm for ₹9,650-crore has already received all the other statutory approvals, including from the banking and capital markets regulators and also CCI.
The Irdai had reportedly expressed certain concerns about the deal, including potential violations of foreign direct investment caps in insurance companies, reliance on borrowings to buy insurance entities and also opacity in IIHL’s structure.
A few days ago, chairman Ashok Hinduja had said that the Mauritius-based IIHL will pay off lenders within 48 hours of getting the Irdai nod and had tied up debt funding of ₹7,500-crore for the deal.
The rest of the ₹2,000 crore will come in as equity from IIHL, which has investments from 600 high networth individuals, including a 9.9 per cent stake by the Hindujas.
PTI
