IRDAI nod likely soon for IIHL's buyout of Reliance Capital's three insurance arms
IRDAI expected to approve IndusInd International Holdings' acquisition of Reliance Capital's 3 insurance companies. NCLT endorsed IIHL's ₹9,650 crore resolution plan for Reliance Capital. Hinduja Group's Aasia Enterprises aids in equity infusion.
Mumbai: The Insurance Regulatory and Development Authority of India () is most likely to give the go-ahead to 's of Reliance Capital's three within a couple of weeks, said people aware of the development. The insurance regulator believes is a major non-banking financial company going through , which need to be closed within the time frame prescribed by the court, they said.Last week, the committee of creditors had asked IndusInd International Holdings (IIHL) to conclude the process by the May 27 deadline. However, had informed lenders that without the IRDAI's approval, it would not be able to conclude the transaction. On February 27, the National Company Law Tribunal (NCLT) gave its nod to IIHL's worth ₹9,650 crore for Reliance Capital, formerly under the control of Anil Ambani. The directed IIHL to close the deal within a 90-day period.
In March, in a letter to the administrator, the IRDAI had expressed reservations regarding IIHL's takeover of Reliance Capital, particularly about IIHL's diverse shareholder structure, under which no single entity holds more than a 10% stake. The IRDAI requested in-depth information on IIHL's , including their identities, countries of incorporation, citizenship, equity percentages and details of major shareholder groups.
"IIHL had responded to the IRDAI's queries and the IRDAI is expected to give its nod within the required time frame," said one of the persons cited earlier, who did not wish to be identified.
Reliance Capital's 100% stake in Reliance General and Reliance Health and 51% stake in Reliance Nippon Life will be sold to IIHL as part of the court-led restructuring process. An IIHL spokesperson declined to comment on the matter, while the IRDAI could not be reached for comment.
In the structure proposed by the Hinduja Group, 30% of the acquisition cost will be covered through equity infusion from Aasia Enterprises, with the remaining 70% financed through debt, as reported on March 28.
Besides, the IRDAI sought a definitive outline of the acquisition transaction, including comprehensive details about involved entities, shareholding arrangements, capital structures, net worth and incorporation timelines. The regulator also probed into special purpose Vehicles linked to IIHL, seeking detailed insights into their shareholding structures, capital compositions and incorporation specifics.
A key area of concern for the IRDAI was the proposed pledging of partnership interest and shares by Aasia Enterprise Ltd Partnership, prompting the regulator to seek clarity on potential non-compliance issues. IIHL has filed a draft structure wherein another entity plans to acquire the entire equity of Reliance Capital, turning it into a wholly owned subsidiary.
Source: Stocks-Markets-Economic Times
