Hinduja Group gets IRDAI approval for Reliance Capital acquisition

Hinduja Group’s IndusInd International Holdings (IIHL) on May 10 received the long-awaited Insurance Regulatory and Development Authority of India’s approval for the acquisition of Reliance Capital.

• Also read: Ready to conclude RCap deal post IRDAI approval: Ashok Hinduja

The acquisition will include the takeover of Reliance Capital’s insurance arms — wholly-owned subsidiary Reliance General Insurance and 51:49 JV with Nippon Life, Reliance Nippon Life Insurance.

The insurance regulator has 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, 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-accruing businesses of Reliance Capital.

RBI clearance awaited

Recently, Hinduja 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 2024, has stipulated the deadline of May 27 for implementation.

• Also read: Hinduja Group seeks RBI nod on proposed corporate restructuring for RCap resolution

The resolution implementation is now pending RBI’s approval for the proposed corporate restructuring of implementing entities. RBI had, in November 2023, approved the original plan of transfer of control of Reliance Capital to IIHL BFSI, subject to a six-month validity ending May 17.

The restructuring is believed to have been triggered by IRDAI’s discomfort with the earlier approved ownership structure for the insurance subsidiaries. The structure had implementing entities — IIHL BFSI (India) Ltd and Aasia 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 regarding corporate governance 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.

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