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