Hinduja Group firm hopes to take over Reliance Capital by Jan-end; triple fin services biz to Rs 4.24 lakh crore in 5 years

New Delhi: Hinduja Group company IIHL is expecting to complete the acquisition of debt-ridden Reliance Capital (RCAP) by next month and aims to ramp up banking, financial services, and insurance (BFSI) business more than three-fold to USD 50 billion in the next five years.

"Most of the approvals and procedures related to the resolution process of Reliance Capital are complete. Couple of the procedures at the end of the administrator and CoC are to be completed. We hope that all these will be over in the next 4-6 weeks and RCAP should come into the fold of Hinduja Group by the end of January," IIHL Chairman Ashok P Hinduja said.

With the acquisition of RCAP, he said IndusInd International Holdings Ltd (IIHL) is targeting a valuation of USD 50 billion by 2030 as against the current valuation of USD 15 billion (as on September 30, 2024).

Mauritius-based IIHL emerged as the successful suitor with a bid of Rs 9,650 crore for the resolution of RCAP. Later, the company paid Rs 200 crore to bolster RCAP solvency, which was over and above the bid amount.

The National Company Law Tribunal (NCLT), Mumbai, on February 27, 2024, approved IIHL's resolution plan and subsequently extended the deadline for completion of the transaction to January 31, 2025.

As soon as delisting of shares is over, money will be handed over to RCAP debtors, he said, adding that delisting usually takes 4-6 weeks.

Other procedures include creation of trust for transfer of excluded assets, capital reduction, release of all charges on assets of RCAP, etc.

Of the total amount, Rs 2,750 crore is the equity portion while the rest is debt and all these are fully committed, he said.

With regard to branding, he said, "For three years we can continue with the same name as per the NCLT approval but we are keen to promote the IndusInd brand and professional agencies are working on blending the brand for campaign post-acquisition." Sharing the road map for business expansion, Hinduja said the focus will be on value creation, bancassurance and digitalisation to improve customer and policyholder experience.

For bancassurance partnerships, he said Reliance Capital will negotiate with IndusInd Bank, a subsidiary of IIHL.

IndusInd Bank serves about 41 million customers through 3,040 branches/banking outlets and 3,011 ATMs, reaching 1.61 lakh villages across India.

Asked about the change in top executives post-acquisition, he said the current management would run the business for the momentum as they are doing a good job.

"We don't see a need to change them. If the companies have survived and generated profits in the last 3-4 years, it means they are performing well. Value creation is essential," he said.

However, he said, five directors, including Moses Harding John and Arun Tiwari, will be inducted into Reliance Capital as approved by the Reserve Bank of India (RBI).

RCAP, registered as core investment company with the RBI, has several entities under it, including Reliance Nippon Life Insurance, Reliance General Insurance, Reliance Money, Reliance Securities, Reliance Asset Reconstruction, and Reliance Commercial Finance.

"Out of the 39 subsidiaries of Reliance Capital, we plan to divest 34 or 35, as they are mostly small shell entities with small businesses," he said.

"There are buyers for these entities, but we cannot discuss or negotiate today because they would like to go through due diligence. I expect that we should be able to exit these entities before March. I am anticipating receiving anything within Rs 1,000 crore from various divestments," he said.

The liquidity generated will be available for Reliance Capital to invest in new opportunities and repayment of debt, he added.

On the initial public offering (IPO) of RCAP, he said it can be looked at after two years of operations.

The RBI, in November 2021, 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.