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IRDAI Grants Conditional Approval for Hinduja Group-Led IIHL Bid to Acquire Reliance Capital

Hinduja Group's IIHL Gets Go-Ahead to Revamp Reliance Capital

13 May 2024


Kunal Tyagi

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  • IRDAI grants conditional approval to Hinduja Group's IIHL for Reliance Capital takeover.

  • Approval received on May 10, 2024, coinciding with Akshay Tritiya.

  • IIHL aims to fulfill regulatory requirements and conclude the transaction by May 27, 2024.

In a significant development in the financial landscape, the Insurance Regulatory and Development Authority of India (IRDAI) has given conditional approval to IndusInd International Holdings Ltd (IIHL), a Hinduja Group firm, for the takeover of debt-laden Reliance Capital. This approval, received on May 10, 2024, marks a crucial step forward in the resolution process, coinciding with the auspicious occasion of Akshay Tritiya.

The conditional nature of the approval underscores the importance of fulfilling regulatory, statutory, and judicial requirements. IIHL has expressed its commitment to swiftly address these conditions, aiming to conclude the transaction by the National Company Law Tribunal's deadline of May 27, 2024. Gratitude has been extended to all stakeholders, including regulators and the administrator, for their timely support throughout this process.

Central to this approval is the transfer of Reliance Capital's insurance businesses, namely Reliance General Insurance and Reliance Nippon Life Insurance, to IIHL. With Reliance Capital being a promoter of these entities, the approval paves the way for a significant restructuring within the insurance sector.

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The journey towards this acquisition has been marked by various milestones and challenges. The National Company Law Tribunal's endorsement of IIHL's resolution plan in February 2024 signaled a positive turn, following the rejection of previous bids due to lower valuations. The involvement of regulatory bodies such as the Reserve Bank of India underscores the intricate nature of such acquisitions and the need for comprehensive due diligence.

While the IRDAI's approval is a significant leap forward, there remain areas of scrutiny, including adherence to foreign direct investment caps and financial structuring. However, with clear strategies in place, including debt funding and equity infusion, IIHL is poised to navigate these challenges effectively.

Looking ahead, the completion of this acquisition holds promise for both IIHL and Reliance Capital. With plans to divest real estate investments and optimize shareholder value, IIHL aims to capitalize on growth opportunities in the financial services sector, setting ambitious targets for market capitalization by 2030.

In conclusion, the IRDAI's nod for the Hinduja Group-led IIHL bid marks a pivotal moment in the journey towards resolving Reliance Capital's financial challenges. As stakeholders await the fulfillment of remaining regulatory requirements, the path forward appears promising, heralding a new chapter in India's financial landscape.

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