Hinduja rejigs fundraise plan for Reliance Capital deal

Mumbai: Hinduja Group, the winning bidder for Reliance Capital (RCap), has reworked its fundraising plan by splitting it into two blocks: domestic and overseas. The group is looking to raise ₹7,500 crore funds from a mix of domestic and overseas private credit funds at 15%. Domestically, Hinduja plans to raise ₹3,500 crore from investors, including IIFL’s 360 ONE, offering a 15% return. For the overseas segment, they are in discussions with private credit funds such as Cerberus and Edelweiss Alternatives, offering 15% plus withholding tax. The total cost for the overseas debt, including withholding tax, is expected to be around 16.5%.

Barclays and 360 ONE are acting as arrangers. Spokespersons of Hinduja, Barclays, 360 ONE, Cerberus did not immediately respond while Edelweiss’ spokesperson declined to comment.

IIHL, the group’s investment arm, has requested a 90-day extension from May 27, 2024, to implement the approved resolution plan, with a hearing scheduled for June 25.

Last July, the committee of creditors approved Hinduja Group’s ₹9,650 crore bid for Reliance Capital. The Reserve Bank of India (RBI) had seized control of the Anil Ambani-owned company, which was burdened with ₹40,000 crore in debt, on November 30, 2021, due to governance concerns. Nageswara Rao Y, a former executive director at Bank of Maharashtra, was appointed as the administrator.

The insurance regulator has given approval to IIHL for the acquisition of three Reliance Capital insurance companies, “subject to certain regulatory, statutory, and judicial clearances.” This approval is crucial for the transfer of Reliance General Insurance, Reliance Nippon Life, and Reliance Health Insurance to IIHL but restricts the winning bidder from pledging shares of the insurers.Last month, IIHL BFSI (India), linked to the Hinduja Group, sought the banking regulator’s approval to pledge 100% of shares of Reliance Capital, to raise ₹8,000 crore, as reported by ET. Investors have enquired about the status of RBI approval on the structure of the company that will be acquiring Reliance Capital.