Ashok Hinduja, chairman, IIHL, said that the promoter will not look at raising its stake from the existing 16.4% to 26% immediately in one go, as it would involve infusing capital worth $1 billion.
“15% to 26% stake increase, there is a policy of the regulator (RBI). We have received the letter, which clearly said to follow the process, as per guidelines. The various forms and other information, completed. The same has gone to IndusInd Bank. The bank has also cleared it through its board. Now, it has gone to the regulator. I am hoping that maybe in a week or two weeks we should get their response,” Hinduja told reporters on Friday. “Once we get that, we’ll start the process of raising the capital through the bank or through the market. Or, we’ll create a combination,” he added.
Also Read: Implementation of RCap resolution plan by 31 March deadline untenable: IIHL
In April last year, RBI had given in-principle approval to IIHL to increase its stake in the bank to a maximum of 26%.
IIHL has a 12.49% stake in the bank, while IndusInd Ltd has a 3.9% stake in the bank, as per the the lender’s latest shareholding pattern available on the BSE.
IIHL is also awaiting approval from the insurance regulator Irdai for the acquisition of Reliance Capital’s three insurance companies under the bankruptcy process. Once the approval is in, Hinduja is confident of repaying the entire dues to lenders within the deadline of 27 May, as per the terms of the resolution process.
Also Read: IndusInd Bank Q4 Results: Net profit increases 15% YoY ₹2,346 crore, dividend declared
“I am hopeful that the approval will come as quickly as possible. Normally, the approval process takes two to three months, what we understand. The original information (application) was submitted in November, 2023,” said Hinduja. ” I have a letter from the lender that in 72 hours, of pressing the button, the funds, that is, ₹7,500 crore would be made available,” he added.
On 27 February, the National Company Law Tribunal (NCLT) gave its nod to IIHL’s resolution plan worth ₹9,650 crore for Reliance Capital, formerly under the control of Anil Ambani. The tribunal directed IIHL to close the deal within a 90-day period. Except the insurance regulator, the deal has received the approval of RBI and Competition Commission of India.
Economic Times had earlier reported that Irdai had expressed reservations regarding IIHL’s takeover of Reliance Capital, particularly about its diverse shareholder structure, under which no single entity holds more than a 10% stake. The insurance regulator had requested in-depth information on IIHL’s shareholders, including their identities, countries of incorporation, citizenship, equity percentages and details of major shareholder groups, it said.
Also Read: IndusInd Bank share price has 35% upside potential; well placed on growth, NIM, asset quality, says ICICI Securities
With the resolution process of Reliance Capital underway and the recent acquisition of a 60% stake in Invesco Mutual Fund, Hinduja expects IIHL’s valuation to touch $50 billion by 2030 from $20 billion a year ago.
Hinduja also added that the promoter IIHL could even look at selling Reliance Capital’s insurance companies to IndusInd Bank, once it receives the approval from Irdai. Sumant Kathpalia, the managing director and chief executive officer of IndusInd Bank, has expressed interest in applying for an insurance licence once it receives capital from the promoter.
“For IndusInd Bank, as and when they get the permission, it will be left to the management to take a call, to start afresh or they will look in the market for any acquisition like in the case of Bharat Financial Inclusion,” said Hinduja. “So, any transactions we have to do between the IndusInd Bank, though the promoter may be common, it will be on an arm’s length basis,” he added.
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Published: 06 May 2024, 07:01 AM IST