IndusInd Bank promoter IIHL approves raising $1.5 bn to fund Reliance Capital acquisition

Also, IIHL said it has recently acquired a majority holding in a bank in the Commonwealth of The Bahamas and has also received an in-principle approval for a banking licence in Mauritius, thereby exploring options to set up a greenfield bank or consider inorganic acquisition.

Further, IIHL is likely to be listed by next year and many global sovereign or private equity funds have expressed interest in participating in the company's growth story.

IIHL board has recommended a special interim dividend at the rate of 10 percent to reward its shareholders. The board has also approved a buyback scheme for partial dilution for its original shareholders at $20 (face value of $1).

Ashok P. Hinduja, Chairman of IIHL, said, "This strategic decision opens boundless opportunities to expand IIHL’s business horizon in India and other global geographies, in the BFSI sector. IIHL’s aspirations will not be capital constrained as raising capital for IIHL is not an issue at all."

As much as 99 percent of votes were in favour of IIHL as lenders expected to recover cash upfront of Rs 9,661 crore from the Hinduja Group entity. Besides, a cash balance with Reliance Capital of over Rs 500 crore would also go to lenders. So, all lenders are expected to receive about Rs 10,200 crore for distribution against Rs 16,000 crore principal secured debt, resulting in a 65 percent recovery for the lenders.

Voting on the IIHL resolution plan started on June 9 and ended on Thursday (June 29). The Committee of Creditors (CoC) had set a minimum bid amount of Rs 9,500 crore for the first round and Rs 10,000 crore for the second round (in April this year), with an additional Rs 250 crore for subsequent rounds.

The second round of auction was held on April 26 after the Supreme Court allowed the lenders to go ahead with the extended challenge mechanism in order to maximise the recovery from the sale of Reliance Capital's assets.

Shares of IndusInd Bank Ltd ended at Rs 1,379.65, up by Rs 4.60, or 0.33 percent on the BSE.