Hinduja confirmed that IIHL has secured all necessary regulatory approvals and completed the fundraising process. The delisting of Reliance Capital will commence shortly under the supervision of the administrator and Committee of Creditors (CoC), and the transaction is expected to close in January 2025. The liquidity from subsidiary sales will enable Reliance Capital to pursue new opportunities.
The Mumbai bench of the National Company Law Tribunal (NCLT) approved IIHL’s resolution plan on 27 February 2024. IIHL appointed 360 One and Barclays to help raise funds.
Of the total acquisition cost of Rs 9,861 crore, Rs 2,750 crore is already with the CoC and Rs 3,000 crore in debt has been raised and set aside, Hinduja said. “The remaining Rs 4,300 crore in debt will be paid on the delisting of Reliance Capital’s shares,” he added.
IIHL also intends to relist Reliance Capital, along with its general insurance and life insurance units, separately within two years.
IIHL emerged as the successful resolution applicant in April 2023 for acquiring the troubled financial services company under the Corporate Insolvency Resolution Process of the Insolvency and Bankruptcy Code. As part of the NCLT resolution plan, IIHL can use the Reliance Capital brand for three years, though the company plans to quickly rebrand under the IndusInd International Holdings umbrella. “We will reconstitute the board, and while no changes are planned for the current management team, which has performed well. We will focus on value creation and professionalism,” Hinduja said.
Discussing value creation from the transaction, Hinduja stated that bancassurance will be crucial for both life and general insurance. As such, terms will be negotiated IndusInd Bank and other banks, as bancassurance creates mutual value.
“This relationship will be established at arm’s length. For bancassurance partnership, Reliance Capital will negotiate with IndusInd Bank and other banks. We will consider working with the bank that offers the best terms. It will benefit both the banks and the insurance companies. IndusInd Bank, in particular, has been recognized for its strong marketing acumen in selling insurance products,” he said.
On inorganic value creation, Hinduja said it had previously considered European banks.
“We have already acquired a bank in the Bahamas, an offshore entity under IIHL. Another European bank is currently in negotiations, which may take a few months to complete. It is important to note that IIHL is highly respected by regulatory authorities worldwide .This makes all acquisition processes smooth, with no KYC or regulatory issues, for example we got regulatory approval for the acquisition in the Bahamas within 60 days.
