RCap: Birla Sun Life may tap regulator over lack of data | The Financial Express

RCap: Birla Sun Life may tap regulator over lack of data

Aditya Birla Sun Life Insurance Company (ABSLI), a bidder for debt-laden Reliance Nippon Life Insurance Company (RNLIC), has warned it will seek regulatory intervention as lack of data is making it difficult to evaluate the deal.

RCap: Birla Sun Life may tap regulator over lack of data
ABSLI, a subsidiary of Aditya Birla Capital, also said that while it got access to the data room in October this year, its requests for follow-up information did not elicit any response. (IE)

Aditya Birla Sun Life Insurance Company (ABSLI), a bidder for debt-laden Reliance Nippon Life Insurance Company (RNLIC), has warned it will seek regulatory intervention as lack of data is making it difficult to evaluate the deal. The company, a bidder for Reliance Capital’s (RCap’s) 51% stake in the insurance firm, has charged the administrator with not providing critical information despite repeated reminders.

“The pendency of critical information is making it very difficult for us to evaluate the proposal suitably and, therefore, we are requesting urgent intervention from key stakeholders to expedite and resolve the issues,” ABSLI said in a letter to RCap administrator and its committee of creditors (CoC).

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“Further, if the lack of critical information relating to RCap’s assets continues, without any intervention by yourselves, we may be constrained to seek interventions of relevant regulators and authorities to address these issues and to ensure that the resolution process of RCap and its assets is conducted in a manner so as to ensure value maximisation,” it warned.

ABSLI, a subsidiary of Aditya Birla Capital, also said that while it got access to the data room in October this year, its requests for follow-up information did not elicit any response. Further, queries were not addressed nor its demand for a management meeting considered.

The firm also said if it gets the information too close to the submission deadline of November 28, it may not be able to seek necessary approvals for submitting the financial bid. This may even result in the submission of a sub-optimal resolution plan, it warned.

“Considering the timelines of the final submission of the resolution plan, it becomes all the more critical that the requisite information or clarifications are provided at the earliest, failing which the terms of the resolution plan may be impacted,” it said in the letter dated November 16.

ABSLI was a late entrant into the bidding process of RNLIC, in which Japan’s Nippon Life holds a 49% stake. RNLIC did not get any bids during the initial stages of the insolvency process. Now, there are only two bidders for the 51% stake held by RCap in RNLIC – ABSLI and Nippon Life. Also, Nippon Life was looking to rope in a strategic partner to acquire RCap’s stake. The Japanese company is exploring partnership options to jointly bid for RNLIC.

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Nippon Life had also informed the administrator that it is not interested in merging with ABSLI to acquire the remaining stake in RNLIC. At present, Indian insurance rules do not permit a foreign entity to hold more than 74% stake in an Indian insurance firm.

On November 29, 2021, the RBI had superseded RCap’s board following payment defaults and governance issues, and appointed Nageswara Rao Y as the administrator for its bankruptcy process.

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First published on: 22-11-2022 at 06:20 IST