Comments
Piramal-led consortium’s bid for Reliance Capital may not be considered valid as it could be in breach of regulatory norms. Current norms of the Insurance Regulatory and Development Authority of India (IRDAI) do not permit an entity to be the promoter of more than one insurance company in the same line of business.
Following its acquisition of Dewan Housing Finance Corporation Ltd, Piramal Enterprises Ltd (PEL) is the ultimate holding company and promoter of Pramerica Life Insurance Company. PEL holds 50 per cent share capital in the life insurer through its stake in DHFL Investments Ltd. In case the consortium acquires Reliance Capital, PEL would become the promoter of Reliance Nippon Life Insurance as well.
According to sources, IRDAI has written to the administrator of RCap that Piramal’s bid in the current form will be contrary to the existing regulations.
PEL did not respond to an email query by BusinessLine on the issue. However, a source said PEL is engaging with IRDAI and the administrator of Reliance Capital on how to proceed with the issue so that the consortium’s bid remains valid.
CoC’s purview?
The bid was placed under both the options — for the whole entity at the group level as well as on the cluster-level basis. The consortium is led by PEL Finhold Private Ltd and has APAC Investment IV and VII and India Resurgence Fund as partners.
IRDAI’s objections could possibly mean that the bid under the second option for business clusters could be considered by the Committee of Creditors (CoC). If allowed, Piramal will be able to bid for specific businesses under RCap instead of the whole company.
PEL also holds indirect shareholding in Shriram Life Insurance through its indirect investment of 20 per cent in Shriram Capital. PEL’s stake in Shriram Life Insurance at 14.91 per cent is understood to be in breach of IRDAI’s individual investor limit of 10 per cent. In this case, the regulator has accepted Piramal group’s request to lower the stake to the prescribed limit within a period of 18 months, effective May 4, 2022.
As many as 54 companies have bid for Reliance Capital as part of its ongoing resolution process. Of this, only three bidders — the consortium led by the Piramal group, YES Bank and HDFC Ergo — are understood to have held management meetings for the submission of resolution plans.
The CoC has extended the deadline for submission of plans to June 30.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.