Hinduja Group has now submitted a new plan changing the entire corporate structure of the transaction for the implementation of the resolution plan which again has been submitted to all the regulators for their fresh approvals
Mumbai/Hyderabad
In a bid to overcome issues with the Indian insurance regulator IRDAI, Hinduja group has moved swiftly to set up four new Indian companies for the regulatory compliance that would facilitate group’s acquisition of debt laden Reliance Capital Limited under the insolvency and bankruptcy code.
After being allowed by the National Company Law Tribunal(NCLT), Hinduja group promoted IndusInd International Holding Limited (IIHL)had sough the IRDAI’s approvals to take over Reliance Capital Limited, which has two performing insurance subsidiaries- Reliance General Insurance and Reliance Nippon Life Insurance and a defunct health insurance company.
The IRDAI, as part of its due diligence process, had raised several fundamental issues concerning the shareholding of IIHL and fund raising plans of Hinduja group by making use of shares of RCL’s insurance subsidiaries.
Responding to IRDAI’s objections, Hinduja Group has now submitted a new plan changing the entire corporate structure of the transaction for the implementation of the resolution plan which again has been submitted to all the regulators for their fresh approvals.
In the new scheme of things, getting approvals from all the regulatory bodies will be a time consuming process and the administrator of RCL and COC(Committee of creditors) will be left with no other option but to approach the National Company Law Tribunal(NCLT) for seeking an extension for the closure of RCAP resolution plan, said informed sources.
Earlier, in Feb, the NCLT had approved Hinduja Group promoted firm IndusInd International Holding’s(IIHL’s) Rs 9,650-crore resolution plan for RCL and afterwards set date of May 31 to complete the transaction.
Accordingly, IIHL, a Mauritius based special purpose vehicle and another Hinduja promoted Indian entity Aasia Enterprises, had submitted a proposal to seeking approvals of the IRDAI, Reserve Bank of India(RBI),Sebi and the Competition Commission of India(CCI)’s for acquiring RCL.
All the regulators had already given their clearances except the IRDAI.
New Plans
Now, with just 20 days left to the deadline for closing the resolution plan, the IIHL has introduced four new companies namely, Cyqure India Private Limited, Ecopolis Properties Private Limited, Cyqurex Technologies Private Limited, and IIHL BFSI Holding Limited, in the transaction.
According to IIHL,Cyqure India will act as the holding company of Aasia as it will hold a majority stake in Aasia Enterprises, and its shareholders will be the same as that of partners of Aasia -Ashok Hinduja, Harsha Hinduja, and Shom Hinduja.
Besides this, the other two new companies, Cyqurex Technologies and Ecopolis Properties will be the 100 per cent subsidiaries of Aasia Enterprises.
The fourth newly introduced and incorporated company, IIHL BFSI Holding Ltd will be 100 per cent owned by IIHL
With such major changes in the entire corporate structure at this late stage, the 27 May deadline to close the resolution plan seems almost impossible now.
“We have submitted the second proposal through the proper processes. And I am hopeful that the approval from the IRDAI will come as quickly as possible. Normally, the approval process takes two to three months, what we understand. The original Application was submitted in November, 2023. So, if we check the timeline, we’d say that the IRDAI was submitted with whatever information they required, right from November onwards. So, I think they would move fast with the approval process,’’ Ashok Hinduja, chairman, IIHL had said last week while addressing a media meet adding that the regulator has its own time frame.”
Introduction of new companies in the transaction will be involve filing of fresh applications for approvals from the IRDAI, SEBI, CCI, and other regulatory bodies.
If the IRDAI approvals don’t come by May 27, the deadline for the take over of RCL by the new promoters has to be extended, expected Hinduja.
This will be a disruption for the lenders of RCL, including Employees’ Provident Fund Organisation (EPFO), Life Insurance Corporation (LIC) and Provident Funds which have been insisting IIHL on closing the resolution plan within the NCLT directed deadline of 27 May, and make a payment of Rs 9661 crores to the lenders. EPFO, LIC and other provident funds own over 50 per cent of the total debt of Reliance Capital.
“The funding of Rs 9,650 crore will have 25 per cent of equity, 75 of debt. If tomorrow, I get the approval from the IRDAI, I will be ready in 48 hours, within the 27th of May, to make the payment,’’ Hinduja had said.
Apart from expanding the existing life and general insurance business of the insolvent Reliance Capital Limited(RCL), Hinduja group’s IIHL (IndusInd International Holdings) will be keen to revive its defunct health Insurance company, Hinduja had said at the media meet while announcing the company’s ambitious plans to achieve a valuation of $50 billion by 2030 after acquiring RCL.