The Hinduja Group is talking with investors to raise Rs. 4,300 crore for the next round of funding to buy Anil Ambani’s Reliance Capital. This purchase is moving forward as part of the ongoing insolvency process, according to The Economic Times.
In September, the group secured Rs. 3,000 crore in the first round of funding through Barclays and 360 One. However, the second round is delayed because it is waiting for approvals from the Department for Promotion of Industry and Internal Trade (DPIIT).
The Hinduja Group’s Rs. 9,650 crore plan to resolve Reliance Capital’s situation was approved by creditors in July 2023. This approval came after the Reserve Bank of India stepped in when the company defaulted on debts of Rs. 40,000 crore. The funding for the acquisition will come from both equity and debt sources.
Most of the funding will be through debt. Out of the total Rs. 9,650 crore, Rs. 7,300 crore is being raised using debt instruments. In September, IndusInd International Holdings Ltd (IIHL) raised Rs. 3,000 crore by issuing non-convertible debentures with a 14.50% interest rate. The second round of Rs. 4,300 crore, which Barclays and 360 One are helping with, will be recorded in Reliance Capital’s accounts once it receives regulatory approval.
A source indicated that Barclays and 360 One have started the process for the second round of funding, expecting it to wrap up by the first week of December.
The National Company Law Tribunal (NCLT) approved the resolution plan in February 2024. However, IIHL has asked for an extra 90 days starting from May 27, 2024, to carry out the plan. The group also submitted another application on July 30 for more guidance from the tribunal.
Last week, the DPIIT approved IIHL’s acquisition of Reliance Capital, which is struggling with debt. This approval was required because IIHL has investors from Hong Kong. Rules state that investments from countries sharing a land border with India need government approval.
According to Press Note 3, any investment from countries like China, Bangladesh, Pakistan, Bhutan, Nepal, Myanmar, and Afghanistan, or where citizens or permanent residents hold significant ownership, must go through the government for approval.