At long last, Hinduja Group gets IRDAI nod for RCap acquisition
The Hinduja Group’s IndusInd International Holdings (IIHL) has received the long-awaited nod from the Insurance Regulatory and Development Authority of India to acquire Reliance Capital.
The acquisition will include the takeover of Reliance Capital’s insurance arms — wholly-owned subsidiary Reliance General Insurance and the 51:49 Nippon Life JV Reliance Nippon Life Insurance.
The insurance regulator cleared the transfer of Reliance Capital’s 26 per cent stake in Reliance Nippon Life to Aasia Enterprises. Post the transaction, Reliance Capital, Nippon Life Insurance and Aasia Enterprises LLP will be the promoters of the company.
The approval is valid for three months and subject to certain “regulatory, statutory, and judicial clearances/compliances”. Further, the IRDAI has also sought details of the share transfer post the completion of the acquisition.
The approval has been long pending and crucial to the resolution plan given that the insurance arms are the highest revenue-earning businesses of Reliance Capital.
RBI CLEARANCE AWAITED
Recently, Chairman Ashok Hinduja had said that the Group would make the upfront resolution payment of ₹9,650 crore to lenders within 48 hours of getting the go-ahead.
The NCLT, which approved the RCap resolution plan in February, had set a deadline of May 27 for implementation.
The resolution implementation is now pending the RBI’s approval. The RBI had, in November 2023, approved the original plan of transfer of control of Reliance Capital to IIHL BFSI, subject to a sixmonth validity ending May 17.
The restructuring is believed to have been triggered by the IRDAI’s discomfort with the earlier approved ownership structure for the insurance subsidiaries. The structure had implementing entities — IIHL BFSI (India) Ltd and Aasia
KEY EVENTS
The National Company Law Tribunal on February 27 greenlights Hinduja Group firm IndusInd International Holdings Ltd’s ₹9,650-crore resolution plan for Reliance Capital
IRDAI approval is crucial for the transfer of insurance businesses of Reliance Capital — Reliance General Insurance and Reliance Nippon Life Insurance, to the IIHL
Post the transaction, Reliance Capital, Nippon Life Insurance and Aasia Enterprises LLP will be the promoters of the company
In November 2021, the RBI superseded the board of Reliance Capital on governance issues and payment default by the Anil Dhirubhai Ambani Group company
IIHL is committed to securing clearances and aims to complete the transaction by May 27; failure may result in default
Enterprises LLP wherein RCap’s entire shareholding was to be transferred to holding company IIHL BFSI (India), and certain assets, including general insurance, were to be transferred to Aasia given IRDAI’s 74 per cent cap on foreign shareholding in Indian insurance companies.
Per the new proposed structure, Cyqure India Pvt Ltd will have four Hinduja Group partners and hold majority stake in Aasia Enterprises. Ecopolis Properties and Cyqurex Technologies will be set up as wholly-owned subsidiaries of Aasia, whereas IIHL BFSI Holding will be a wholly-owned arm of IIHL.
The central bank had, in November 2021, superseded the board of Reliance Capital on concerns over corporate governance issues and payment defaults, and appointed Nageswara Rao Y as the administrator. The company had a debt of over ₹40,000 crore at the time of going under insolvency.