Hinduja group company IndusInd International Holdings Limited (IIHL) has approached Japanese banks to raise up to ₹8,000 crore to finance a bid for Reliance Capital, formerly promoted by Anil Ambani, ahead of the May 27 deadline set by a bankruptcy court to close the deal, sources told ET.
Japanese banks may derive comfort from Reliance Capital’s association with Nippon Life, a joint venture partner of the former, according to the sources. The two together run a life insurance joint venture in India.
The funds could come at a rate much lower than what IIHL has been discussing with other lenders so far.
ET had first reported on July 12 that the Hindujas had discussed raising $1 billion from global private credit funds to finance the Reliance Capital acquisition. However, funds from those sources could come at 15-16% a year, and the group is looking for cheaper sources.
The discussions with three Japanese banks – Mizuho, SMBC and MUFG – are for five year loans at an interest cost of 8-9% a year but the funding is yet to be finalized, as per the sources cited earlier.
While IIHL could raise at least half the amount through this new route being tapped, the Hinduja family will have to bridge the deficit by pumping in equity to meet the total funding requirement.
Hinduja group had not responded to ET’s queries. Mizuho’s executives were unavailable for comment. MUFG and SMBC declined to comment.
Japanese financiers have been scaling up their presence in India and have demonstrated greater risk appetite to provide funding locally. In the past they financed Indian corporates with foreign currency loan requirements from their overseas balance sheets. In November last year, Mizuho pumped in ₹4,100 crore to strengthen its India balance sheet. MUFG pumped ₹3,000 crore into its Indian banking operation in September 2022. SMBC also pumped in ₹4,458 crore in 2020 into its India business, doubling the total committed capital here.
Reliance Capital’s lenders have approved a ₹9,650 crore resolution plan made under insolvency and bankruptcy code (IBC) rules from IIHL that could result in a successful debt resolution for the stressed financial services company.
The Hinduja family who are also the owners of IndusInd Bank owns a bulk of their 15% stake in the bank through Mauritius-based IIHL which is the holding company for the group’s interests in the financial services space.
The Reserve Bank of India had superseded the board of Reliance Capital on 30 November 2021 citing governance concerns. It brought in Nageswar Rao Y, a former executive director at Bank of Maharashtra as the company’s administrator.
