IRDAI seeks details on IIHL’s proposed takeover of RCap’s insurance arms

IRDAI has written to the administrator of Reliance Capital on March 20 seeking details of IndusInd International Holdings’ proposed takeover of insolvent RCap and its insurance subsidiaries.

The letter was in response to applications filed by the insurance subsidiaries in October 2023 and meetings held with the administrator in December 2023 and March 2024.

While IndusInd International furnished a response in February 2024, the same has not been signed by the Administrator and the CEOs of the respective insurance companies and it lacks complete information, the regulator said as per the letter accessed by businessline.

• Also read: RCap’s lenders urge Indusind to complete resolution process by March 31

IRDAI has also sought details of all 600 shareholders of IndusInd International, none of which hold more than 10 per cent shares, for due diligence. These include their names, country of incorporation/citizenship and shareholding in the company. The regulator also sought details of the equity stake held in IIHL by major shareholder groups acting in concert.

“The said transaction structure is indicative structure subject to change. You are requested to provide definitive structure, along with details of the entities involved, in order to carry out due-diligence. The details should include name, country of incorporation, shareholding pattern, capital structure, net worth, year of incorporation etc,” the letter said.

It also sought shareholding pattern and capital structure of the proposed SPVs (special purpose vehicles), and the definitive structure post any proposed changes, including details of any holding company that may be set up.

IRDAI also questioned proposals, stating pledging of shares and borrowing funds via the holding company, which it deemed as violation of regulatory guidelines. It also sought the details of the said borrowing, instruments to be issued, proposed subscribers, rate of interest and tenure, among others, and proof of the holding company’s ability to meet future capital requirements of the insurance companies.

“It is proposed that another company is proposing to acquire entire equity of the RCL, which shall make RCL a wholly owned subsidiary of the said company. Please clarify why the same should not be construed as non-compliance,” IRDAI said, adding that if RCap will continue as a holding company, then why should it not be construed as an SPV.

It also sought updates on the cases, pertaining to the insurers and the resolution process of RCap, pending with various courts and tribunals, and on approvals from SEBI, RBI and CCI.

“Please provide the information, as above, at the earliest for us to examine the applications further,” the regulator said.

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