DPIIT nod in, aim to complete Reliance Capital acquisition by Jan end: IIHL Chairman Ashok Hinduja

Ashok Hinduja, Chairman, IIHL

IndusInd International Holdings has received the nod from the Department for Promotion of Industry and Internal Trade (DPIIT) for the acquisition of Reliance Capital and is targeting the completion of the Rs 9,861 crore buyout by the end of January 2025.

That's the word coming in from Ashok Hinduja, Chairman, IIHL who has ambitious plans for the firm's expanding para banking portfolio which is targeting a valuation of $50 billion by 2030.

To be sure, IIHL is the promoter of IndusInd Bank and is also the entity which received the NCLT's (National Company Law Tribunal) nod for the buyout of Reliance Capital under the insolvency and bankruptcy code.

"Now it’s just a process. The administrator and the COC ( committee of creditors) have to complete certain procedural formalities such as delisting of equity and NCD, creation of trust for transfer of excluded assets, capital reduction, release of all charges on assets of Reliance Capital etc. This will take around four - six weeks. Hence, the actual takeover and deal will be closed by the end of January 2025," Hinduja told a media briefing in Mumbai.

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How is IIHL funding the deal?

Hinduja elaborated on the break-up and said , "An amount of Rs 2,750 crores is already paid and is lying with the Committee of Creditors. An additional amount by way of debt of Rs 3,000 crore is already raised and kept in a separate account, pending closure of certain activities."

" The debt of Rs 4300 crores is ready for disbursement upon delisting of Reliance Capital shares from the stock exchanges. The lenders to these funds are 360 One and Barclays," he added.

A sum of Rs 200 crore, which was over and above the bid amount, was paid initially to bolster Reliance General Insurance's solvency.

IIHL plans to continue with the same management post the completion of the transaction and Hinduja added that securing bancassurance for the life insurance and general insurance verticals will be key.

"At the moment, the current management (MD & CEO) is doing a good job, and we don’t see a need to change them. If the companies have survived and generated profits in the last 3-4 years, it means they are performing well. Value creation is essential.

These entities currently have no bancassurance tie-ups, so the first step will be to establish bancassurance relationships. Post-acquisition, I am hopeful that we will secure bancassurance partnerships and implement digitization to improve service to policyholders before March 2025. The various group companies will leverage their marketing network to sell insurance and other products," he said.

Additionally, IIHL, which had a valuation of $15 bn as of September 30, plans to divest 34 to 35 small subsidiaries of the total 39 subsidiaries of Reliance Capital. The anticipated liquidity of around Rs 1,000 crores will be available for Reliance Capital to invest in new opportunities.

What about a strategic partner for Reliance Capital?

"I have to see value for my shareholders in IIHL. So, any investor who is coming as a minority investor, either at the holding company level or at the subsidiary level, is always welcome, because I will be giving that freedom," Hinduja told the briefing.

Earlier in April, IIHL made a foray into the asset management space with the acquisition of a majority stake in US-based Invesco AMC’s India arm.

Also Read: Hinduja Group's IIHL acquires 60% stake in Invesco India Asset Management