IRDAI objects to Reliance General Insurance proposal to transfer 25% shared to Hindujas
In yet another setback to the Hinduja Group, the Insurance Regulatory and Development Authority of India (IRDAI) has objected to the proposal of Reliance General Insurance (RGIC) to transfer 25% equity to Aasia Enterprises LLP, a Hinduja Group company.
Reliance Capital, which is undergoing the Corporate Insolvency Resolution Process (CIRP), holds 100% equity in the Reliance General Insurance Company. IndusInd International Holding Ltd (IIHL) has emerged the successful bidder for Reliance Capital after the Committee of Creditors (COC) approved its resolution plan. The same is awaiting the NCLT approval.
The IRDAI in a letter to the Reliance General Insurance has said that the shares held by the Reliance Capital are part of the insolvency resolution process.
Moreover, says the insurance regulator, the entire shareholding of Reliance Capital in the RGIC is pledged in favour of IDBI Trusteeship Services Ltd. (ITSL), and the matter pertaining to this is currently sub-judice with the Supreme Court.
In view of these facts, the IRDAI has asked Reliance General Insurance to clarify the rationale for filing such an application with the insurance regulator, especially when NCLT approval on the resolution plan is pending and the matter is awaiting final disposal in the Supreme Court too.
Earlier in October, the IRDAI had rejected IIHL’s proposal to raise funds by pledging shares of Reliance General Insurance and Reliance Nippon Life Insurance. IRDAI had indicated that no application for change in control would be considered favourably if the source of the funds for the acquisition contemplates creation of pledge over the shares of an insurance company.
Hinduja Group had proposed to raise a debt of $850 million from the leading foreign funds and banks to fund the acquisition of Reliance Capital Ltd.
Hinduja Group had proposed to raise this debt against the assets of Reliance Capital, which primarily includes Reliance Capital’s 100% stake in Reliance General Insurance and 51% stake in Reliance Nippon Life Insurance. These two assets constitute more than 90% of the value of Reliance Capital.
Also See: Torrent moves SC against approval of Reliance Capital resolution plan
