IndusInd Bank Holding Company To Secure $1.5 Billion For RCap Acquisition And Stake Increase To 26 pc

IndusInd Bank Holding Company, announced plans to raise $1.5 billion in order to finance its acquisition of Reliance Capital (RCap) and increase its stake in the bank to 26%, PTI Reported.

This move was confirmed in a statement released from Port Louis. Notably, on June 29, the lenders of Reliance Capital, facing financial challenges, accepted IndusInd Bank's revised bid of Rs 9,661 crore.

IIHL emerged as the top bidder in the auctions, making a significant cash offer of Rs 9,661 crore and securing an overwhelming 99% of the lenders' votes. The bid not only includes the cash offer but also incorporates the transfer of the Rs 500 crore cash balance from RCap to the lenders. This comprehensive bid translates into an overall recovery of approximately Rs 10,200 crore, which accounts for approximately 65% of the principal secured debt of Rs 16,000 crore owed by the distressed company to its lenders.

"The decision to raise UDS 1.5 billion opens boundless opportunities to expand our business horizon in the country and also other global geographies, in the BFSI sector. Our aspirations will not be capital constrained as raising capital is not an issue at all for us," chairman of IIHL Ashok P Hinduja was quoted as saying in the statement.

The board also authorised expanding its share of IndusInd Bank from its present 15% to 26%.

Global sovereign funds and private equity firms allegedly indicated interest in taking part in the bank's expansion and fundraising efforts.

The firm is expected to make IIHL public next year, according to the announcement.

It should be mentioned that IIHL recently bought a majority stake in a bank in the Commonwealth of The Bahamas and has in-principle approval for a banking licence in Mauritius. According to the corporation, the licence will be used to either pursue an acquisition or establish a brand-new bank.

The majority of the company's shareholders, who have been with it for at least three decades, received a special interim dividend of 10% from the board.

The board also gave the go-ahead for a repurchase programme with a partial dilution price of USD 20 for its original shareholders.

Due to the impending July 15 filing deadline, RCap administrator is most likely to submit the IIHL resolution plan in the NCLT Mumbai this week. Operating businesses under Reliance Capital are engaged in asset reconstruction, broking, and insurance (life, general, and health).

On November 29, 2021, the Reserve Bank replaced the Reliance Capital board due to payment defaults and major governance difficulties, and Nageswara Rao was named administrator.