Hinduja Group to raise $1.5 bn to fund Reliance Capital buyout

Hinduja group-owned IndusInd International Holdings (IIHL) announced a $1.5 billion capital raising plan. The plan will increase IIHL’s holding in IndusInd Bank to 26% from the current 15% and will also fund the acquisition of debt-ridden Reliance Capital (RCap).

The lenders to Reliance Capital have accepted the revised Rs 9,661 crore bid by IndusInd Bank. IIHL had made the highest cash offer in the auctions and secured as much as 99% of the lenders’ votes.

The company has claimed that global sovereign funds and private equity funds have expressed interest in participating in the fundraising. IIHL is also likely to take IIHL public next year.

The company has recently acquired a majority holding in a bank in the Commonwealth of The Bahamas and had also received in-principle approval for a banking licence in Mauritius. It is also in the process of acquiring asset management and wealth management businesses to complete its para banking suite.

The board of IIHL has also announced a special interim dividend of 10% to shareholders and approved a buyback scheme for partial dilution for its original shareholders at $20.

In short, IIHL is expanding its business and raising capital to fund its growth. The company is likely to go public next year and is also in the process of acquiring new businesses to expand its para banking suite.

The long-drawn insolvency resolution process of Reliance Capital got further close to a closure on 29 June. The lenders of Reliance Capital have voted in favour of the resolution plan submitted by IIHL with a 99.6% votes. As per the resolution plan, the lenders will receive an upfront cash of Rs 9661 crores from Hinduja group-backed IIHL.

With Rs 500 crore cash in balance with Reliance Capital, lenders are likely to receive a total of Rs 10,200 crores for distribution as against Rs 16,000 crores principal secured debt, resulting in 65% recovery for the lenders.

The lender’s nod now allows the administrator of Reliance Capital to file the resolution plan of in the Mumbai bench of the NCLT, seeking its final approval on the matter. The Administrator is likely to file the matter next week.

It must be noted that the deadline to file the Resolution Plan with NCLT was 15 July 2023.

Also Read: Reliance Capital lenders approve IIHL resolution plan with 99.6% votes