Days after making a foray into the asset management space with the acquisition of a majority stake in US-based Invesco AMC’s India arm, IIHL (IndusInd International Holdings) Chairman Ashoka Hinduja announced ambitious plans for the firm's expanding para banking portfolio which is targeting a valuation of $50 billion by 2030.
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.
The revised $50 billion target is 25 per cent higher than the earlier one set by IIHL
"That (IIHL's BFSI portfolio valuation target) has changed and by 2030, it's going to be $50 billion. See, the time has come for digitization. Importance will be given to get value and move fast to create digitization. The more you get into technology, the valuation will go up. This will be to complete our BFSI suite," Ashok Hinduja said in response to a query by Moneycontrol during a media briefing in Mumbai.
On October 25, 2023, Ashok Hinduja had told Moneycontrol in an interview at Carlton House Terrace, London, UK that the group is evaluating targets and eyeing a valuation of $35 billion to $40 billion in the BFSI segment by 2030.
IIHL's plans to acquire Invesco Asset Management India Ltd were first reported by Moneycontrol on April 2. The transaction was officially announced later on April 9.
Elaborating further on IIHL's expansion plans , Ashok Hinduja added, " As far as IIHL is concerned, they are open for anything. The pockets are full. (If) any opportunity will come, we will definitely take a look. I would say not only in India, we will look at opportunities outside India also. So, take an example, currently due diligence is going on for a bank in Switzerland, in Liechtenstein, in Germany, and another in Luxembourg. The plan is four entities under one umbrella and the due diligence is going on. So if everything goes well, we'll have it."
In response to a query on reform priorities of the new government post elections, Hinduja cited the example of China and called for new policies for overseas Indians to boost remittances and facilitate greater participation by them in the India growth story.
The Reliance Capital buyout and the road ahead
IIHL has received clearance from Sebi, CCI (Competition Commission of India) and RBI and is awaiting the green signal from the insurance sector regulator IRDAI for the Rs 9,661 crore Reliance Capital acquisition. May 27 has been set as the deadline by the bankruptcy court to conclude the purchase and funding has been tied up for the deal, according to Hinduja.
According to media reports, initially, the IRDAI had expressed reservations about the shareholding structure of IIHL in a letter to the administrator.
When asked about the pending decision of the IRDAI, Hinduja shared, " I am hopeful that the approval will come as quickly as possible. Normally, the approval process takes two to three months. The original information (application) was submitted in November, 2023. So, if we check the timeline, we'd say that the IRDAI was provided with whatever information they required, right from November onwards. So, I think they would move fast with the approval process. If you ask me, are we ready for the 27th? We are ready for even 15th May."
Rival suitor Torrent Investments has moved the Supreme Court, seeking the latter's intervention in the NCLT approved sale of Reliance Capital to IIHL.
Will that be a hurdle?
Hinduja doesn't think so and said, " Supreme Court, we are not waiting because Supreme Court has clearly stated, there is no stay on the process. So, whether that comes or not, the transaction will move."
When will IIHL hike its stake in IndusInd Bank?
Post issuance of guidelines by RBI on Ownership and Governance in Private Banks, in February 2005, IIHL brought down its stake to the current level of 15 per cent in IndusInd Bank, the country's fifth largest private sector lender.
It has approached the RBI for an increase in its shareholding in IndusInd Bank from 15 per cent to 26 per cent, post acceptance of recommendations of Internal Working Group (IWG) of the RBI to this effect.
Asked about the status of the stake hike plans, Hinduja said the regulatory process is underway and he is hoping to hear from the RBI in a few weeks.
"There is a policy of the regulator. We have received the letter, which clearly said to follow the process, as per guidelines. The various forms have to be completed and the same has gone to IndusInd Bank. The bank has also cleared it through its board. Now it has gone to the regulator. I am hoping that maybe in a week or two weeks we should get their response. Once we get that, then we'll start the process of raising the capital through the bank or through the market. Or we will create a combination," Hinduja added.
He was quick to add that the proposed stake hike in IndusInd Bank would not be carried out at one go.
"I need more than one and a half billion dollars. But I will not do (hike stake) at one time. Because if I do that, that means I'm giving that money to the bank. I don't want to spoil the management. What will they do with that money? So as and when the growth pattern will come, the funds will be provided. And I can't go in the market and start acquiring, because I need a wide base," he clarified.
Last July, IIHL had announced that it had decided to raise capital of $1.5 billion to increase its holding in IndusInd Bank and to fund its acquisition of debt-ridden Reliance Capital.
Incidentally, an overseas initial public offer is also in the works for the Mauritius based IIHL, which has over 600 high net-worth shareholders keen on an exit at the appropriate time and valuation. During the media interaction, Hinduja indicated that the firm could be listed on Afrinex, the largest stock exchange of Mauritius.
In the earlier interaction with Moneycontrol in October, he said jurisdictions like the UK, Singapore, Dubai and Luxembourg were also being considered as potential listing destinations for IIHL.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
