Mumbai:
Reliance Capital, part of Anil Ambani-led Reliance Group, on Sunday said the Insurance Regulatory and Development Authority of India(Irdai) has cancelled the 100 per cent pledge enforcement of Reliance General Insurance Company Ltd's (RGICL) shares by Credit Suisse and Nippon India MF.
The insurance regulator IRDAI on December 27, has held that the pledge/transfer of shares of RGIC, a 100% subsidiary of Reliance Capital Limited (RCAP), was in violation of the applicable provisions of law.The regulator also said its prior approval was not taken for the transfer. The Irdai added that the unauthorised transfer also violates FDI regulations.
IRDAI has directed IDBI Trusteeship Services not to give effect to any encumbrance or transfer or any change in the shareholding of RGICL, according to a BSE filing by Reliance Capital (RCAP).
Pursuant to the Irdai direction, 100 per cent shareholding in RGICL stands restored to RCAP, it added.
In November 2019, the IDBI Trusteeship had transferred RCAP's 100 per cent shareholding in RGIC by invoking pledge, which was contested by the company, RCap said in a statement.
The IRDAI action will benefit all lenders of Reliance Capital as sale proceeds of RGICL's shares will go to all lenders abd debenture holders and not just Credit Suisse and Nippon India MF.
The sale of RGICL's shares is expected to fetch Rs 6,000 crore for RCAP lenders, which is almost 40 per cent of the total RCAP secured debt.
The company will continue with its efforts to monetise its shareholding in RGICL as part of its overall plan for debt reduction, the statement added.
RGIC had ealier decided to withdraw its proposed initial share sale offer.The initial public offering (IPO) was slated for fresh issue of shares worth Rs 200 crore, besides an offer of sale of 79,489,821 shares by Reliance Capital.
Proceeds of the proposed issue was to be utilised for future capital requirements, expected to arise from the growth and expansion of the business, improving solvency margin and consequently solvency ratio.
Markets regulator Sebi had received draft red herring prospectus for the proposed IPO on February 8 through lead manager (LM) of the issue Motilal Oswal Investment Advisors.