The administrator to Reliance Capital’s (RCap) insolvency process has sought the details of Hinduja Group’s source of funds and business plans after the insurance regulator rejected its proposal to raise funds by pledging shares. The group had earlier sought approvals to raise funds to complete RCap’s resolution process by pledging shares of the debt-laden firm’s two insurance subsidiaries.
The Hinduja Group is the successful resolution applicant for the former Anil Ambani group company, when it placed an all-cash bid of Rs 9,800 crore through a group firm – IndusInd International Holdings (IIHL) – in April.
In a letter to IIHL, the administrator has sought the firm to submit a fresh application, along with the source of funds and the business plan which does not “contemplate the creation of pledges”.
This followed a meeting the administrator had with the Insurance Regulatory and Development Authority of India (IRDAI) on October 9. The regulator had stated that no application for change in control would be considered, if the source of the funds for the acquisition contemplates pledging of shares of RGIC and RNLIC.
Earlier in September, IIHL had sought IRDAI’s approval for the creation of a pledge over RGIC and RNLIC shares to raise funds. It had proposed to raise the debt against the assets of RCap, which primarily includes the parent company’s 100% stake in RGIC and 51% stake in RNLIC.
These two assets constitute more than 90% of RCap’s value. IIHL had also sought a change in ownership of RGIC and RNLIC to raise the funds.
IIHL is also in talks with lenders such as JP Morgan, Barclays Bank, Brookfield, Cerberus Capital, Apollo-USA and Oaktree-Singapore to raise $850 million to complete the resolution process.
In June this year, RCap lenders approved IIHL’s resolution plan with 99.6% votes and the plan is currently pending before the NCLT’s Mumbai bench for final approval. NCLT will hear the resolution plan for approval on October 25.
In July, RCap’s administrator for the insolvency process filed the resolution plan submitted by the Hinduja Group before the NCLT for its approval.
RCap has been in insolvency since November 29, 2021, when the RBI superseded its board.