Hinduja rejigs consortium to acquire cash-strapped Reliance Capital

New structure will help meet FDI ceiling of 74% for insurance sector

Mauritius-based IndusInd International Holdings Ltd (IIHL) has restructured the consortium to acquire Reliance Capital by introducing more four new India-based entities to it -- Cyqure India, Ecopolis Properties, Cyqurex Technologies, and IIHL BFSI Holding.

The new structure will help the group to meet the foreign direct investment (FDI) ceiling of 74 per cent for the insurance sector.

In the new structure, Cyqure India will act as the holding company of Aasia Enterprises and mirror the same shareholders -- Ashok Hinduja, Harsha Hinduja, and Shom Hinduja, who hold the Indian passport.

Besides this, the other two new companies, Cyqurex Technologies and Ecopolis Properties, will be the 100 per cent subsidiaries of Aasia Enterprises. IIHL BFSI Holding will be fully owned by IIHL.

The new structure will help the Hindujas to meet India’s insurance guidelines. The Insurance Regulatory and Development Authority of India (Irdai) had earlier raised queries on IIHL, a Mauritius-based firm, holding a majority stake in Reliance Capital, which, in turn, holds 51 per cent in Reliance Nippon Life Insurance Company (RNLIC).

Nippon Life of Japan holds 49 per cent in RNLIC. Reliance Capital also holds 100 per cent in general insurance.

The introduction of the new companies will help the group to meet the FDI criterion in insurance guidelines as Aasia Enterprises and other Indian entities will now hold 26 per cent in RNLIC while 25 per cent will be held by IIHL.

An email sent to IIHL did not elicit any response.

In a media interaction last week, Ashok Hinduja, chairman of IIHL, said he hoped the insurance regulator’s permission would come within weeks.

“I am hopeful approval will come as quickly as possible. Normally, the process takes two to three months and our original application was submitted in November 2023. So, if we check the timeline, we’d say that the (regulator) was (given) whatever information it required, right from November onwards. So, I think it would move fast with the approval process,” he had said.

Hinduja had hinted at a new investor in the consortium but did not give detail. The Hinduja group will pay Rs 9,661 crore to acquire Reliance Capital with a mix of debt and equity.

“An investor has brought the funds and it is going as equity. So 25 per cent is equity while 75 per cent is debt,” Hinduja had said.

In February this year, the National Company Law Tribunal had asked IIHL to close the deal by May 27 after giving its clearance and receiving permission from all regulators to close the transaction. While all the other regulators have given their permission, clearance from Irdai is pending.

Story so far
 

December 2021: Reliance Capital sent to NCLT for debt resolution
 

December 2022: Hinduja wins race to acquire RCap in second auction

October 2023: Torrent, winner of first auction, moves SC appealing against second auction. No stay by SC
 

February 2024: NCLT Mumbai approves resolution plan by IndusInd International Holdings