Acquisition of RCAP completed by IndusInd International Holdings: Ashok Hinduja

Ashok Hinduja, Chairman of IndusInd International Holdings Ltd (IIHL), announced on Tuesday that the acquisition of debt-ridden Reliance Capital (RCAP) has been successfully completed. The bid amount has been transferred to lenders, with the management transfer expected to occur on Wednesday.

It is to be noted IIHL emerged as the successful resolution applicant in April 2023, securing the bid for Reliance Capital through the Corporate Insolvency Resolution Process (CIRP) with a winning offer of Rs 9,650 crore.

Hinduja stated that the transaction has been finalised, with the transfer of funds currently in progress. He emphasized that the focus will now shift towards creating value, estimating the conservative value of the Reliance Capital business to be Rs 20,000 crore.

IIHL will conduct a comprehensive review of the entire RCAP business to determine the necessary fund infusion moving forward, Hinduja added.

"The transaction from our side is over. As we are speaking, money is moving from one escrow to another," Hinduja said in a media conference.

He added: “Reliance Capital has more than 30 shell companies, and we will stick to only insurance companies and most probably exit from the rest of the companies.” 

Hinduja mentioned that the board will make the ultimate decision regarding the issue at hand.

Public listing

Hinduja provided an update on the potential public listing of Reliance General Insurance and Reliance Nippon Life within the next 2-3 years, with plans to remove the 'Reliance' branding. Reliance Capital, which currently employs around 1,28,000 individuals, is undergoing a review to determine the retention of 39-40 units post acquisition.

The final decision regarding the retained units will be made by the board, with Hinduja revealing intentions to exit RCap units aside from broking and asset reconstruction. The entity will only retain broking and bad loan businesses.

Furthermore, Hinduja revealed that IndusInd Bank is the preferred choice for bancassurance, with no plans for additional pledging of IndusInd Bank shares for the acquisition of Reliance Capital. 

During Tuesday's press conference, Hinduja mentioned that the debt incurred for the acquisition will be repaid through an initial public offering (IPO). He also stated that the rebranding of RCap operations to IndusInd is expected to be completed within 6-9 months. Additionally, the new management of Reliance Capital will strategize fundraising efforts for the insurance sector.

Earlier this year, IIHL successfully obtained all necessary regulatory approvals from the Reserve Bank of India (RBI), the Insurance Regulatory and Development Authority of India (Irdai), as well as from relevant stock and commodity exchanges.

Reliance Capital was placed under administration by the RBI in November 2021 due to governance issues and payment defaults related to the Anil Dhirubhai Ambani Group.

Nageswara Rao Y was appointed by the central bank as the administrator, who then initiated the process of soliciting bids for the takeover of the company in February 2022.