Hinduja Group to complete Reliance Capital acquisition by Jan 2025-end
Hinduja Group company IIHL is on the verge of completing its acquisition of debt-ridden Reliance Capital (RCAP) by the end of January 2025. This acquisition is poised to significantly boost IIHL’s banking, financial services, and insurance (BFSI) business, with a target valuation of $50 billion by 2030, a threefold increase from its current valuation of $15 billion, IIHL Chairman Ashok P Hinduja said on 15 December 2024.
IIHL emerged as the successful bidder for RCAP, offering Rs 9,650 crore and an additional Rs 200 crore to bolster the company’s solvency. The National Company Law Tribunal (NCLT) approved this resolution plan in February 2024.
Post-acquisition, Hinduja Group plans to streamline RCAP’s operations. The company intends to divest 34-35 non-core subsidiaries, aiming to generate around Rs 1,000 crore from these divestments. The funds will be utilized to repay debt and invest in new opportunities.
To enhance customer experience and drive growth, IIHL will focus on value creation, bancassurance partnerships, and digitalization. IndusInd Bank, a subsidiary of IIHL, is expected to collaborate with RCAP for bancassurance initiatives.
While the current management team of RCAP will continue to lead the business, five directors, including Moses Harding John and Arun Tiwari, will be inducted into the company, as approved by the Reserve Bank of India (RBI).
RCAP, registered as core investment company with the RBI, has several entities under it, including Reliance Nippon Life Insurance, Reliance General Insurance, Reliance Money, Reliance Securities, Reliance Asset Reconstruction, and Reliance Commercial Finance.
“Out of the 39 subsidiaries of Reliance Capital, we plan to divest 34 or 35, as they are mostly small shell entities with small businesses,” Ashok P Hinduja said.
“There are buyers for these entities, but we cannot discuss or negotiate today because they would like to go through due diligence. I expect that we should be able to exit these entities before March. I am anticipating receiving anything within Rs 1,000 crore from various divestments,” he added.
The liquidity generated will be available for Reliance Capital to invest in new opportunities and repayment of debt, he added.
On the initial public offering (IPO) of RCAP, he said it can be looked at after two years of operations.
The RBI, in November 2021, superseded the board of Reliance Capital on governance issues and payment defaults by the Anil Dhirubhai Ambani Group company.
The central bank had appointed Nageswara Rao Y as the administrator, who invited bids in February 2022 to take over the company.
The acquisition of RCAP by Hinduja Group marks a significant milestone in the Indian BFSI sector. With a clear focus on growth and innovation, the company is well-positioned to capitalize on the opportunities presented by this strategic move.
Also See: Hinduja Group to raise $1.5 bn to fund Reliance Capital buyout
