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IIHL Awaits IRDAI Nod for Reliance Capital Acquisition
May 06, 2024
The chairman of International Industrial Holdings Limited (IIHL), Ashok Hinduja, has revealed that the Insurance Regulatory and Development Authority of India (IRDAI) has yet to approve IIHL’s Rs 9,650-crore acquisition of Reliance Capital.
Hinduja stated that IIHL has been in contact with IRDAI since November regarding the deal and expressed hope that the approval would be granted soon. Typically, such approvals are expected within 2-3 months.
IIHL has secured Rs 7,500 crore from several banks for the acquisition, with the remaining portion of over Rs 2,000 crore to be sourced through equity.
Despite the looming May 27 deadline set by the National Company Law Tribunal (NCLT) for the acquisition, Hinduja remains optimistic about completing the deal promptly upon receiving IRDAI’s approval. He emphasized IIHL’s commitment to pay the bid amount within 48 hours of regulatory clearance.
The acquisition plan, approved by the NCLT Mumbai bench on February 27, includes taking over Reliance Capital’s general and life insurance businesses.
Although the deal has received approvals from the Reserve Bank of India (RBI), Competition Commission of India (CCI), and Securities and Exchange Board of India (SEBI), concerns have been raised by IRDAI, including potential violations of foreign direct investment (FDI) caps, reliance on borrowings for acquisitions, and structural opacity within IIHL.
Hinduja declined to comment on media reports but assured that IIHL is prepared to move forward with the payment even if the Supreme Court’s verdict on the matter is pending.
Post-acquisition, IIHL plans to divest real estate investments associated with the transaction and grow its insurance arms, including launching a health insurance business.
Hinduja also mentioned IIHL’s ambition to list on fundraising platform Afrinex in the future and increase its stake in IndusInd Bank to 26 percent, pending regulatory approvals. IIHL aims to surpass USD 50 billion in valuation for its Indian financial services businesses by 2030, with significant contributions expected from IndusInd Bank.
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