The Hinduja Group expects to complete the ₹9,861 crore acquisition of Reliance Capital by the end of January, nearly a year after the National Company Law Tribunal (NCLT) approved its rescue plan for the bankrupt lender.
IndusInd International Holdings Ltd (IIHL), the Hinduja Group company that submitted the resolution plan, said it has received all regulatory approvals, including from the Department for Promotion of Industry and Internal Trade (DPIIT), to complete the acquisition.
“The administrator and the committee of creditors (CoC) have to complete certain procedural formalities such as delisting of equity and non-convertible debentures, creation of trust for transfer of excluded assets, capital reduction, release of all charges on assets of Reliance Capital etc. This will take around four-six weeks. Hence, the actual takeover and deal will be closed by the end of January 2025,” group chairman Ashok Hinduja told reporters.
DIPP approval was required as some IIHL shareholders are residents of Hong Kong, a special administrative region of China. The Union government’s Press Note 3 says if an entity from a nation sharing a land border with India, or is a citizen or permanent resident of any such country, is the beneficial owner of an investment in India, it must secure government approval first.
Awaiting regulatory clearances
The deal has been awaiting regulatory and legal clearances, after receiving approval from the Mumbai bench of NCLT on 27 February 2024. Lenders suspected that IIHL was citing the lack of clearances to delay implementation.
In May, A.P. Hinduja had said there was no further regulatory or judicial approval required other than clearance from the Insurance Regulatory and Development Authority of India (IRDAI), and the group could make the payment in 48 hours once this approval was granted.
However, the payment got delayed as the group was unable to raise funds before the NCLT deadline ended in May. Since then, IIHL has managed to tie up funds worth ₹7,300 crore. It raised ₹4300 crore by selling high-yield bonds of 42 months’ tenure from Barclays Capital and 360 One, while the remaining ₹3000 crore came from 360 One.
Looking at divestment
“An amount of ₹2,750 crore is already paid and is lying with the Committee of Creditors. An additional amount by way of debt of ₹3,000 crore is already raised and kept in a separate account, pending closure of certain activities. The debt of ₹4300 crore is ready for disbursement upon delisting of Reliance Capital shares from the stock exchanges,” Hinduja added.
Sharing his thoughts on the future strategy, Hinduja explained that the group is looking to divest 34 out of the 39 subsidiaries of Reliance Capital, as they are mostly small shell entities with small businesses. He said that Hinduja will go with the existing management of Reliance Capital to run businesses, even as it inducts new board members at the holding company. He also expressed the group’s willingness to get a minority investor on board.
“There are so many interested parties to enter as a minority holder at the holding company in Mauritius, because they see value in this. So, I have to see value for my shareholders in IIHL. So, any investor who is coming as a minority investor, either at that level or at the subsidiary level, always welcome, because I will be giving that freedom,” said Hinduja.
