The insurance regulator approved the Hinduja Group’s acquisition of Reliance Capital’s life, general and health insurance businesses on condition it will not pledge shares of the companies, said people with knowledge of the matter. The Hinduja Group is yet to receive the approval of the Reserve Bank of India (RBI) and the Competition Commission of India (CCI) for the deal to be concluded, the people said. IRDAI gave its approval on Friday evening, adding that “the shares of the insurer shall not be pledged or encumbered” without the regulator’s approval, according to one of the persons cited.
IIHL to Pay Rs 211 cr Extra to Lenders
The Hinduja Group confirmed that it had got the regulator’s consent. “We are happy to acknowledge the receipt of approval from Insurance Regulatory and Development Authority of India(IRDAI) yesterday on the auspicious occasion of Akshay Tritiya. The approval is subject to certain ‘regulatory, statutory, and judicial’ clearances/compliances,” an IIHL spokesperson said in an email.
“IIHL stands committed to working towards obtaining the same as soon as possible and aims to close this transaction by the NCLT’s stipulated date May 27.” The National Company Law Tribunal (NCLT) had given its nod to a Rs 9,661 crore resolution plan proposed by the Hinduja Group’s IndusInd International Holdings Ltd (IIHL). The court has directed IIHL to make the payment by May 27, subject to all necessary approvals. Additionally, the Hinduja Group entity will be required to pay an extra Rs 211 crore to lenders, which will be adjusted against the capital infused by them in Reliance General Insurance to maintain its solvency margin.
“IIHL is prepared to pay Reliance Capital’s lenders within 48 hours of receiving the insurance regulator’s approval,” IIHL chairman Ashok Hinduja had told reporters a week ago. Under the plan, IIHL will establish a subsidiary, IIHL BFSI Holdings (Mauritius), in which it will hold 51%, while other group companies will collectively hold the remaining 49%. IIHL BFSI (Mauritius) will float a 100% subsidiary, IIHL BFSI (India) Ltd, which, in turn, will hold a 100% stake in Reliance Capital, formerly an Anil Ambani company.
“These changes in the holding structure will necessitate a fresh approval from RBI from the fit and proper point of view,” said one of the persons cited above. Reliance Capital will hold 74% of Reliance General Insurance and Reliance Health Insurance, and the balance 26% will be held by Aasia Enterprise, a Hinduja company. In the case of Reliance Nippon Life Insurance, Aasia Enterprise will hold a 26% stake and Reliance Capital will retain 25%.
Nippon currently has a 49% stake. Ashok Hinduja had said the plan is to grow the life and non-life businesses and start health insurance operations. Y Nageswara Rao, the administrator appointed by the Reserve Bank, had admitted claims worth `25,345 crore from lenders as of January 10, 2024. The company has a cash balance of about Rs 300-400 crore, which will be distributed among lenders.
