CCI okays stake acquisition of Reliance Capital by IndusInd International and partners

The Competition Commission of India (CCI) on Wednesday (December 27) said it has approved the acquisition of the stake in debt-ridden Reliance Capital Ltd by IndusInd International Holdings Ltd, IIHL BFSI (India) Ltd, and Aasia Enterprises LLP.

IndusInd International Holdings Ltd (IIHL) is one of the promoters of private lender IndusInd Bank Ltd.

Back on November 29, 2021,  the Reserve Bank of India (RBI) superseded the board of Reliance Capital in view of payment defaults and serious governance issues. The RBI appointed Nageswara Rao Y as the administrator in relation to the Corporate Insolvency Resolution Process (CIRP) of the firm.

Reliance Capital is the third large non-banking financial company (NBFC) against which the central bank has initiated bankruptcy proceedings under the Insolvency and Bankruptcy Code (IBC). The other two were Srei Group NBFC and Dewan Housing Finance Corporation (DHFL).

The central bank subsequently filed an application for initiation of CIRP against the company at the Mumbai bench of the National Company Law Tribunal. In February last year, the RBI-appointed administrator invited expressions of interest for the sale of Reliance Capital.

In June 2023, lenders of Reliance Capital voted in favour of a resolution plan submitted by the Hinduja Group firm, which had made the highest cash offer of ₹9,661 crore in the second round of bidding.

As much as 99% of votes were in favour of IIHL as lenders expected to recover cash upfront of ₹9,661 crore from the Hinduja Group entity. Besides, a cash balance with Reliance Capital of over ₹500 crore would also go to lenders.

So, all lenders are expected to receive about ₹10,200 crore for distribution against ₹16,000 crore principal secured debt, resulting in a 65% recovery for the lenders.