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Reiterating that IndusInd International Holdings Limited (IIHL) is ready and committed to concluding the long-drawn Reliance Capital acquisition, Ashok Hinduja, Chairman, IIHL said the company will close the transaction as per slated timelines once the go-ahead from IRDAI, the insurance regulator comes through. “If you ask me, are we ready for the May 27, we are ready for even on May 15,” he affirmed.
With the NCLT order in favour coming through on February 27, 2024, IIHL would have 90 days to pay the consideration to lenders of Reliance Capital which falls due on May 27. Stating that he would not wait for Supreme Court’s verdict on the matter where Torrent, another bidder for RCap challenged the proceedings, Hinduja said, “there is no stay on the process. Whether that (SC order) comes or not, the transaction will move”. Once taken over, Reliance Capital will become a NBFC-CIC (core investment company).
Hinduja also added that IIHL would like to have a control in the Reliance Nippon Life Insurance.
On increasing stake in IndusInd Bank from 15 per cent to 26 per cent, Hinduja clarified that IIHL has received the letter from the regulator for the process. “Various forms and other information (have been) completed. The same has gone to IndusInd Bank. The bank has also cleared it through its Board and it has gone to the Regulator,” said Hinduja adding that he is hoping “that in a week or two weeks we should get their (RBI) response.”
Once that is through, IIHL will start the process of raising the capital through the bank or the market, or create a combination of both options. “I need more than one and a half billion dollars. But I will not do at one time, because I don’t want to spoil the management,” he explained. However, he emphasised that once IIHL receives a go-ahead from RBI, a token investment into IndusInd Bank will be made immediately. “In 48 hours, you will get the news from me that the money has started flowing in.”
Valuations and listing plans
Interestingly, from October 2023 to now, IIHL seems to have upped its valuation target from about USD 30 billion by 2030 to USD 50 billion. Much of this valuations rerating appears to be draw optimism from IndusInd Bank. “We as promoters expect and have confidence that the market cap (of IndusInd Bank) will go up to USD 30-35 billion by 2030,” said Hinduja. The rest is expected to come from insurance companies and asset management business where IIHL recently acquired over 67 per cent stake in Invesco India Asset Management.
Without mentioning timelines, Hinduja also indicated that at some point IIHL will be listed in Mauritius stock exchange, namely Afrinex. Said to be among the largest stock exchanges in Mauritius, BSE holds about 19 per cent stake in the exchange and it is also an investment portfolio company of IIHL.
Other businesses
Apart from the present bouquet of investments, IIHL is keen to grow in the general insurance sector as well where it has received licence for health insurance. “Health will start soon. That will be the new thing,” said Hinduja adding that Reliance Securities and asset reconstruction companies are also of interest to IIHL.
Overlap with bank’s interest
About a year ago, IndusInd Bank was exploring to enter the life insurance sector and in the past has expressed interest to operate in the wealth management business as well -- sectors where IIHL may potentially have an overlap with IndusInd Bank in future. When asked about the same, Hinduja said IndusInd Bank’s management and board will have to take a call on whether they go for acquisition or start these businesses afresh whenever the bank gets a regulatory go ahead for the same.
If IndusInd (Bank) is interested or there is interest from other potential buyers, Hinduja said IIHL will be open to exploring such M&A opportunities. “Any transactions with the IndusInd Bank, though the promoter may be common, will be on an arm’s length basis.”
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