Hinduja Group seeks Rs 4,300 crore for Reliance Capital's second tranche

Hinduja Group seeks Rs 4,300 crore for Reliance Capital's second tranche, delays due to DPIIT approval; first tranche of Rs 3,000 crore raised in September via Barclays, 360 One

The Hinduja Group is in discussions with investors to raise Rs 4,300 crore as part of the second tranche of funding for its acquisition of Anil Ambani’s Reliance Capital. The acquisition is progressing under the ongoing insolvency resolution process, as reported by The Economic Times.

First tranche secured in September

In September, the group raised Rs 3,000 crore in the first tranche through Barclays and 360 One. However, the second tranche has been delayed due to pending approvals from the Department for Promotion of Industry and Internal Trade (DPIIT).

 

The Hinduja Group’s Rs 9,650 crore resolution plan for Reliance Capital was approved by creditors in July 2023. This followed the Reserve Bank of India’s intervention after the company defaulted on debts of Rs 40,000 crore. The acquisition is being funded through a mix of equity and debt.

 

Debt financing at the core

Of the total Rs 9,650 crore, Rs 7,300 crore is being raised through debt instruments. In September, IndusInd International Holdings Ltd (IIHL), through its subsidiary Cyqure India, raised Rs 3,000 crore by issuing non-convertible debentures (NCDs) at a 14.50 per cent coupon rate. The second tranche of Rs 4,300 crore, facilitated by Barclays and 360 One, will be included in Reliance Capital’s financial records upon regulatory approval.

 

A source cited in the report stated that Barclays and 360 One have initiated the second tranche of fundraising, which is expected to conclude by the first week of December.

NCLT approval and extension request

The National Company Law Tribunal (NCLT) approved the resolution plan in February 2024. However, IIHL requested a 90-day extension from May 27, 2024, to implement the plan. The group also filed an additional application on July 30, seeking further directions from the tribunal.

DPIIT nod for acquisition of RCAP

Last week, the Department for Promotion of Industry and Internal Trade (DPIIT) granted approval to IndusInd International Holdings Ltd (IIHL), a Hinduja Group entity, for its acquisition of debt-laden Reliance Capital.

 

The clearance was required due to the involvement of Hong Kong-based shareholders in IIHL. Under regulatory norms, investments originating from nations sharing a land border with India require government approval.

 

As per Press Note 3, any investment from countries like China, Bangladesh, Pakistan, Bhutan, Nepal, Myanmar, and Afghanistan, or where citizens or permanent residents of these nations hold beneficial ownership, must go through the government route.