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Tag: Hinduja Group

  • Reliance Capital acquisition: Hinduja Group’s IIHL gets IRDAI approval

    Reliance Capital acquisition: Hinduja Group’s IIHL gets IRDAI approval

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    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.

    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.

    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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  • NCLT approves Hinduja Group’s resolution plan for Reliance Capital takeover

    NCLT approves Hinduja Group’s resolution plan for Reliance Capital takeover

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    National Company Law Tribunal has approved IndusInd International Holdings’ resolution proposal for the acquisition of Reliance Capital. The Hinduja Group company has been given 90 days to implement the resolution, subject to regulatory and other approvals.

    “The RBI and SEBI approvals are expected to come by next week or so but the IRDAI application is in the process of being filed and might take some time,” sources told businessline.

    The NCLT application was made by RCap administrator Nageswara Rao Y, who took charge of the company in November 2021 when RBI superseded the erstwhile board of directors and initiated insolvency proceedings against the company. The CoC was constituted in December 2021 and met a total of 49 times starting January 2022, before the final proposal was submitted to the NCLT for its approval.

    “The resolution plan provides for the implementation of the terms thereof within a period of 90 days from the approval of the Resolution Plan by the Adjudicating Authority and receipt of certified copy of the order approving the Resolution Plan,” the NCLT notice said, adding that the 90-day timeline may be extended if required.

    IndusInd International has submitted a proposal that includes upfront cash payment of ₹9,650 crore, accounting for 37.03 per cent of the initial amount claimed. The company has also proposed an amount net of ₹50 crore for the benefit of the CoC, which will be part of the upfront cash and an additional Rs 11 crore over and above the proposed amount. 

    The proposed acquisition is now awaiting the approval of the RBI for Reliance Capital and Reliance Asset Reconstruction,  Company Limited, IRDAI for Reliance General Insurance and Reliance Nippon Life Insurance, CCI for the takeover, and SEBI for Reliance Securities and other entities. The deal is also subject to sale of shares of Reliance Home Finance held by Reliance Capital in the open market on various dates.

    On successful completion of the resolution plan, the Hinduja Group will acquire majority shares in Reliance Capital and the company will cease to be listed on stock exchange. Existing shareholding of the company will be cancelled and new shares will be issued to the companies nominated by Hinduja Group.

    Background

    The initial deadline for submission of expressions of interest for Reliance Capital was March 2022 but was extended multiple times till August 2022, when the administrator received bids for both Reliance Capital as a going concern and distinct clusters for individual group companies. However, the CoC decided that the bids needed to be improved and extended the dealine till November 2022, by when the number of applicants had fallen to eight. The average fair value of RCap was determined at Rs 16,696 crore, following which the CoC decided to conduct a challenge mechanism in December 2022 to further improve the financial proposals received.

    Draft resolution plans from Torrent Investment and IndusInd International were shortlisted but Torrent appealed against the resolution when Hinduja submitted a revised proposal after the challenge mechanism had been completed. While NCLT in February 2023 ruled in favour of Torrent, the NCLAT in March 2023 set aside NCLT’s order and allowed the CoC to go ahead with an extended challenge mechanism, which was finally held in April 2023 and under which HInduja Group was the sole applicant.

    The Hinduja’s application was approved by the CoC in July 2023. Even so, delays due to discussions surrounding distribution of funds between financial and operational creditors led to the timeline being extended further. Under Hinduja’s cquisition proposal, secured financial creditors are eligible for 42.73 per cent of the initial amount claimed, unsecured financial creditors for 3.96 per cent, operational creditors for 4.38 per cent, and 38.86 per cent has been approved against other debt and dues. Further, the cash of Rs 285 crore lying with Reliance Capital will be distributed among creditors in the same proportion.

    Torrent’s plea challenging NCLAT’s decision is still pending before the Supreme Court, however the apex court did not stay the insolvency process. The next hearing is scheduled for March 4.

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  • Lenders approve Hinduja Group’s ₹9,661-crore resolution plan for RCap

    Lenders approve Hinduja Group’s ₹9,661-crore resolution plan for RCap

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    The committee of creditors (CoC) of Reliance Capital has approved the resolution plan put forth by IndusInd International Holding, with 99 per cent lenders voting in favour of the plan, sources told businessline.

    Hinduja Group had submitted a bid of ₹9,661 crore, all of which will be paid as upfront cash to acquire Reliance Capital and its subsidiaries. This will be in addition to the cash reserve of about ₹400 crore that RCap has generated by way of loan recoveries, among other avenues, a source said.

    Accordingly, lenders of RCap will receive about ₹10,000 crore against principal outstanding dues of ₹16,000 crore, translating to a recovery of around 65 per cent. Voting on the resolution plan began on June 9 and concluded on Thursday. The plan will now be submitted for approval of the National Company Law Tribunal (NCLT) in 7-10 days, they added. The deadline to file the final resolution plan with NCLT is July 15.

    Hinduja Group via IndusInd International Holdings, was the sole bidder in the extended challenge mechanism for resolution of RCap, submitting a bid of ₹9,650 crore, which included a proposal to infuse ₹300 crore in Reliance General Insurance. The CoC had, in May, voted in favour of equal distribution of proceeds between all members, regardless of whether they are in favour of the resolution plan.

    Meanwhile, Reliance Capital has approached the Supreme Court with the details of the second auction as per the requirements of the pending litigation against Torrent Investments which had alleged preference to the Hinduja Group and had objected to holding the second round of the challenge mechanism.

    The apex court is expected to next hear the case in August; however, with the resolution plan being finalised, the CoC has approached the SC for a hearing sooner than scheduled, businessline had previously reported.

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  • RCap committee of creditors votes for equal distribution of proceeds between members

    RCap committee of creditors votes for equal distribution of proceeds between members

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    The committee of creditors (CoC) of Reliance Capital, on Monday, voted for equal distribution of proceeds between all members, regardless of whether they are in favour of the resolution plan.

    “There are two valuations. One is liquidation value and the other is redistribution value. Here, liquidation value is high, so CoC members were requested that even if someone is dissenting, liquidation value will not be taken and resolution value will be considered for redistribution,” a source told businessline, adding that over 99 per cent of the members voted in favour of this.

    According to this approval, there will now be no distinction between consenting and dissenting members and everyone will get the amount in proportion of their claims. Usually, consenting members are paid as per the resolution value and dissenting members as per the liquidation value.

    The move is reportedly aimed at avoiding any inter-creditor disputes, especially given the delay in the resolution process. Creditors include priority secured creditors, secured creditors, unsecured creditors, and operational creditors.

    Resolution plan

    The CoC is still to finalise the resolution plan, voting for which also take place this week, sources said.

    Once Hinduja Group’s resolution plan has been voted on and approved, CoC will seek the National Company Law Tribunal (NCLT)’s approval for the same, ahead of the deadline of July 15.

    Hinduja Group via IndusInd International Holdings, was the sole bidder in the extended challenge mechanism for resolution of RCap, submitting a bid of ₹9,650 crore, which included a proposal to infuse ₹300 crore in Reliance General Insurance.

    Reliance Capital has approached the Supreme Court with the details of the second auction as per the requirements of the pending litigation against Torrent Investments which had alleged preference to the Hinduja Group and had objected to holding the second round of the challenge mechanism.

    The apex court has not put any restrictions on the resolution process and so the CoC is confident that the legal issue and resolution are separate issues and the NCLT will go ahead with the resolution plan.

    However, now that the resolution process is at the final stages, the CoC has asked the SC for a hearing sooner than the expected timeline of August, sources said.

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