The financing of Hindujas’ acquisition of Reliance Capital has hit the coupon hurdle as lenders including Standard Chartered Bank and Barclays are seeking a 15.5% coupon on a Rs 2,000 crore loan each, people familiar with the matter said.
Hinduja Group’s holding company IndusInd International Holding Ltd (IIHL), which is racing against time to close the deal this weekend, is negotiating for a reduction in coupon, they said.
“IndusInd International Holdings (IIHL) is trying to reduce the cost by nearly one percentage point and is seeking a cheaper loan through ongoing discussions with the lenders,” one of the sources said. “The loan arrangement must be finalised before May 27, as IndusInd International Holdings needs to close the Reliance Capital deal by then,” the person added.
IIHL has been looking to borrow Rs 7,500 crore for the deal, but it has been facing pricing challenges with various credit funds demanding rates on the higher side.
In a media interaction earlier this month, Ashok P Hinduja had said the company had received interest from lenders offering Rs 7,500 crore debt for this acquisition. The company will bring in the remaining funds as equity from IIHL.
360 One Prime, a non-banking finance company, has offered Rs 2,500 crore at a rate of over 15%, while other lenders have shown interest in dividing around Rs 2,000 crore with stricter covenants, one of the people cited above said.
“The negotiations are on the pricing where IndusInd wants to keep the cost low but lenders’ ask is a bit higher due to the collateral being assets from bankrupt Reliance Capital, which it is acquiring through insolvency proceedings in the National Company Law Tribunal (NCLT),” the person said.
Spokespersons of Barclays and 360 One Prime declined to comment while spokespersons of Standard Chartered Bank and IndusInd did not immediately respond to requests for comment till press time on Sunday.
NCLT has approved Hinduja Group’s acquisition of Reliance Capital in February this year and Hindujas have to pay lenders by May 27 to conclude the deal.
IndusInd International Holdings, IIHL BFSI (India) Ltd, and Aasia Enterprises LLP had made a Rs 9,650-crore offer for the bankrupt Anil Ambani company.
In 2021, the Reserve Bank of India superseded the board of Reliance Capital due to the company’s payment defaults, appointing Y Nageswara Rao, former executive director of Bank of Maharashtra, to lead the resolution process.
