Hinduja To Invest Rs 300 Cr In Reliance General Insurance
In order to keep Reliance General Insurance, a division of Reliance Capital, solvent, the Hinduja group has volunteered to invest an additional Rs 300 crore in the company.
In a second auction on Wednesday, Hinduja-owned IndusInd International Holdings (IIHL) placed the highest bid for Reliance Capital of Rs 9,650 crore. In order to meet the solvency requirements set forth by the insurance regulator, IRDA, Reliance General Insurance requested an urgent Rs 600 crore infusion of funds from lenders in December of last year. Earlier, the lenders turned down the request for a cash infusion from their reserve, shifting the financial burden for the general insurance company to the prospective investor.
Hindujas have proposed investing Rs 300 crore in Reliance Capital, while the bid sum of Rs 9,650 crore will go to lenders who had owed the bankrupt company Rs 24,000 crore. The top representatives of the Hinduja group will present their resolution plan at a meeting of the Committee of Creditors (COC) of Reliance Capital on Friday.
Reliance Capital owns 100 per cent of Reliance Nippon General Insurance and 51 per cent of Reliance Nippon Life Insurance. Additionally, it owns a position in the asset reconstruction company, the health insurance provider, the stockbroking firm Reliance Securities, and a 20 per cent share in the Indian Commodity Exchange. The two insurance companies benefit financially from these.
Through its ownership of Indusind Bank and Hinduja Leyland Finance, a non-banking finance company owned by its car manufacturing company, Ashok Leyland, the Hinduja group has a foothold in the financial services industry.
The group's housing financing business is a key component of its plan to expand into the financial services industry. AUM (assets under management) for Hinduja Leyland financing was Rs 33,353 crore as of December 31, 2022, up from Rs 30,048 crore as of March 31, 2022, of which the housing financing segment accounted for 18 per cent.
According to a banking source, the group will have a strong footprint in the financial services industry if the Supreme Court approves the Hinduja takeover.
According to the source, the business has offered Rs 9,650 crore in addition to Rs 300 crore in capital infusion for Reliance General Insurance and another Rs 50 crore for additional expenses.
The IIHL's bid now has a total value of Rs 10,000 crore. In comparison to its own bid of Rs 8,110 crore in the first challenge process, Hinduja's overall bid is Rs 1,900 crore more.
Torrent bid Rs 8,640 crore in the first auction before opting out of the second.
The latest Hinduja bid is more expensive by Rs 1,380 crore when compared to Torrent's highest offer of Rs 8,640 crore in the first challenge procedure. Concerning the banks' plans to hold a second auction, Torrent has petitioned the Supreme Court. In August, the case will be heard.
