Irdai seeks IIHL backer details
The insurance regulator wants details of about 600 shareholders of the Hinduja Group entity set to buy RCap
The Insurance Regulatory and Development Authority of India (Irdai) has sought details of the 600-odd shareholders of IndusInd International Holdings Ltd (IIHL), the Hinduja Group entity set to acquire an insolvent Reliance Capital Ltd (RCap), according to a 20 March letter from the regulator.
Mint has seen a copy of the letter addressed to Nageshwara Rao Y., the administrator of RCap. The letter follows “meetings held with the administrator on 12 December and 11 March”.
On 27 February, the National Company Law Tribunal approved IIHL’s plan to take over debt-laden RCap under the corporate insolvency resolution process of the Insolvency and Bankruptcy Code, 2016. IIHL’s final resolution plan was for ₹9,650 crore and was approved by the majority of lenders.
The plan is to be implemented within 90 days from the date of the order. Irdai’s letter says that during the meeting on 12 December, the administrator was “requested to arrange the details of proposed transferee IIHL, IIHL BFSI (India), and AELLP (Aasia Enterprise LLP)”. While the administrator on 13 February mailed a draft response as received from IIHL, the insurance regulator found it to be incomplete.
“From the draft response, it is indicated that IIHL has 600 shareholders and none of whom holds more than 10% of shares,” said the Irdai letter. Irdai sought details of these 600 shareholders, including their names, country of incorporation or citizenship, and the percentage of equity held. It has also asked for details of the equity stake held by major shareholder groups in IIHL “acting in concert”.
Irdai also sought clarifications related to the proposed corporate structure of RCap and its insurance subsidiaries after the acquisition by Hinduja Group. The queries also relate to the group’s plans to fund the acquisition and the source of funds.
Queries sent to Hinduja, Irdai and Reliance Capital remained unanswered till press time.
The development comes after the Hinduja Group filed an application with the regulator seeking approval for transfer of shares from RCap to the privately-held firm of the Hindujas: Aasia Enterprises LLP. While Ashok Hinduja, chairman of the Hinduja Group of Companies (India), holds 90% in the limited liability partnership, 5% each is held by his wife Harsha and son Shom Hinduja.
In its application to Irdai, Hinduja had mentioned the indicative structure of AELLP, adding it would undergo a change. The regulator, however, has asked IIHL for a more definitive structure post any such change.
“Please provide the definitive structure post such change. The said definitive structure should include details of the entities involved, in order to carry out due diligence,” the regulator’s letter demands. It has also asked for clarifications on the structure of the company’s borrowing plans, including the rate of interest, the instruments to be issued and the proposed subscribers, besides others. Moreover, Irdai has sought clarifications from the Hindujas on the proposed structure for the acquisition of Reliance Capital’s insurance subsidiaries. This includes a clarification on Reliance Capital’s ability to meet the future capital requirements.
₹9,650 cr RCap resolution sum cleared by majority lenders