IRDAI approval was crucial for the transfer of insurance businesses of Reliance Capital to IIHL. Reliance Capital is one of the promoters of Reliance General Insurance and Reliance Nippon Life Insurance.
Hinduja Group’s IndusInd International Holdings (IIHL) has got the long-awaited Insurance Regulatory and Development Authority of India’s nod for acquisition of Reliance Capital. The acquisition includes the takeover of Reliance Capital’s insurance arms — wholly-owned subsidiary Reliance General Insurance and 51:49 JV with Nippon Life, Reliance Nippon Life Insurance.
“We are happy to acknowledge the receipt of approval from IRDAI yesterday (May 10, 2024) on the auspicious occasion of Akshay Tritiya. The approval is subject to certain regulatory, statutory, and judicial’ clearances/compliances,” an IIHL spokesperson said in a statement.
IRDAI approval was crucial for the transfer of insurance businesses of Reliance Capital to IIHL. Reliance Capital is one of the promoters of Reliance General Insurance and Reliance Nippon Life Insurance. The National Company Law Tribunal on February 27, 2024, approved Hinduja Group firm IndusInd International Holdings Ltd’s Rs 9,650-crore resolution plan for Reliance Capital.
The resolution implementation is now pending RBI’s approval for the proposed corporate restructuring of implementing entities.
In November 2021, the Reserve Bank superseded the board of Reliance Capital on governance issues and payment defaults by the Anil Dhirubhai Ambani Group company.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. Reliance Capital had a debt of over Rs 40,000 crore, and four applicants had initially bid with resolution plans.
However, the committee of creditors rejected all four plans for lower bid values and a challenge mechanism was initiated in which IIHL and Torrent Investments participated.
In June 2023, the Hinduja Group firm was selected by the committee for its bid of Rs 9,661 crore upfront cash. Reliance Capital’s cash balance of an additional Rs 500 crore would also go to the lenders. The deal to acquire the Anil Dhirubhai Ambani Group’s financial services arm for Rs 9,650-crore has already received all the other statutory approvals including from the banking and capital markets regulators and also fair play watchdog CCI.
The Irdai had reportedly expressed certain concerns about the deal including potential violations of foreign direct investment caps in insurance companies, reliance on borrowings to buy insurance entities and also opacity in IIHL’s structure.