Irdai seeks details of IndusInd International shareholders for R-Cap deal nod
- On 27 February, the NCLT gave its nod to IIHL's ₹9,650 crore-plan to take over the debt-laden Reliance Capital under the corporate insolvency resolution process of the Insolvency and Bankruptcy Code, 2016
Mumbai: The Insurance Regulatory and Development Authority of India (Irdai) has sought details of the 600-odd shareholders of IndusInd International Holdings Ltd (IIHL), a Hinduja Group entity which is set to acquire an insolvent Reliance Capital Ltd, according to a 20 March letter from the regulator.
Mint has seen a copy of the letter addressed to Nageshwara Rao Y., the administrator of Reliance Capital. The letter follows “meetings held with the administrator on 12 December and 11 March”.
On 27 February, the National Company Law Tribunal gave its nod to IIHL's plan to take over the debt-laden Reliance Capital under the corporate insolvency resolution process of the Insolvency and Bankruptcy Code, 2016. The Hinduja entity's final resolution plan was worth ₹9,650 crore and was approved by a majority of the lenders. The plan has to be implemented within 90 days of the date of the order.
According to the Irdai letter, during the meeting on 12 December, the administrator was “requested to arrange the details of proposed transferee IIHL, IIHL BFSI (India) and AELLP (Aasia Enterprise LLP)”. While the administrator on 13 February mailed a draft response as received from IIHL, the insurance regulator found it to be incomplete.
“From the draft response, it is indicated that IIHL has 600 shareholders and none of whom holds more than 10% of shares,” said the Irdai letter. Irdai sought details of these 600 shareholders, including their names, country of incorporation or citizenship, and the percentage of equity held. It has also asked for details of the equity stake held by major shareholder groups in IIHL “acting in concert”.
The Insurance regulator also sought clarifications related to the proposed corporate structure of Reliance Capital and its insurance subsidiaries following the acquisition by the Hinduja Group. The queries also relate to the group's plans to fund the acquisition and the source of funds.
Queries sent to Hinduja, Irdai and Reliance Capital remained unanswered till press time.
The development comes after the Hinduja Group filed an application with the regulator seeking approval for transfer of shares from Reliance Capital to the privately-held firm of the Hindujas: Aasia Enterprises LLP. While Ashok Hinduja, chairman of the Hinduja Group of Companies (India), holds 90% in the limited liability partnership, 5% each is held by his wife Harsha and son Shom Hinduja.
In its application to Irdai, Hinduja had mentioned the indicative structure of AELLP, adding it would undergo a change. The regulator, however, has asked IIHL for a more definitive structure post any such change.
“Please provide the definitive structure post such change. The said definitive structure should include details of the entities involved, in order to carry out due diligence,” the regulator’s letter demands.
It has also asked for clarifications on the structure of the company’s borrowing plans, including the rate of interest, the instruments to be issued and the proposed subscribers, besides others. Moreover, Irdai has sought clarifications from the Hindujas on the proposed structure for the acquisition of Reliance Capital's insurance subsidiaries. This includes a clarification on Reliance Capital’s ability to meet the future capital requirements.
The letter said that in the proposed structure of the deal, Reliance Capital will be wholly owned by entities based outside India. “In other words, RCL (Reliance Capital Ltd) will have 100% FDI. Please confirm if the same is permissible as per extant FDI law. Please provide reference to the said law that permits the same,” said the letter.
India allows an up to 74% foreign direct investment in the insurance sector.
The insurance regulator has also asked about the status of the approvals received from markets regulator Securities and Exchange Board of India, Reserve Bank of India, and competition watchdog Competition Commission of India.
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Business NewsIndustryMediaIrdai seeks details of IndusInd International shareholders for R-Cap deal nod
First Published:27 Mar 2024, 07:48 PM IST
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