IndusInd Bank holding co to raise $1.5 bn to fund RCap buy, increase stake in lender to 26 pc

Hinduja group-owned IndusInd International Holdings IIHL, the promoter of IndusInd Bank, on Monday announced a USD 1.5-billion capital raising plan to fund the proposed acquisition of Reliance Capital and increase its stake in the lender.The board of the Mauritius-registered IIHL also decided to increase its holding in the fourth-largest private sector lender to 26 per cent from the present 15 per cent, a statement issued from Port Louis said.

Hinduja group-owned IndusInd International Holdings (IIHL), the promoter of IndusInd Bank, on Monday announced a USD 1.5-billion capital raising plan to fund the proposed acquisition of Reliance Capital and increase its stake in the lender.

The board of the Mauritius-registered IIHL also decided to increase its holding in the fourth-largest private sector lender to 26 per cent from the present 15 per cent, a statement issued from Port Louis said. It can be noted that on June 29, the lenders to the crippled Reliance Capital accepted the revised Rs 9,661 crore bid by IndusInd Bank.

IIHL had made the highest cash offer of Rs 9,661 crore in the auctions and secured as much as 99 per cent of the lenders' votes. The bid also includes the Rs 500-crore cash balance with RCap going to the lenders, taking the overall recovery to Rs 10,200 crore or about 65 per cent of Rs 16,000 crore principal secured debt the crippled company owed to lenders.

''The decision to raise UDS 1.5 billion opens boundless opportunities to expand our business horizon in the country and also other global geographies, in the BFSI sector. Our aspirations will not be capital constrained as raising capital is not an issue at all for us,'' chairman of IIHL Ashok P Hinduja was quoted as saying in the statement.

The board also approved increasing its shareholding in IndusInd Bank to 26 per cent from the current 15 per cent.

The first objective of the capital raising is to increase its promoter shareholding in IndusInd Bank from the current 15 per cent to 26 per cent. Accordingly, the IIHL board has resolved to undertake capital raising in a phased manner to mobilise the required funds for infusion, the statement added.

The second objective of the capital raising is towards equity participation for the acquisition of Reliance Capital through the NLCT process, the statement said, adding today, the administrator has issued the duly signed letter of intent. The statement claimed that global sovereign funds and private equity funds have expressed interest in participating in the fundraising/bank's growth story.

The statement further said the group is likely to take IIHL public next year.

It can be noted that IIHL recently acquired a majority holding in a bank in the Commonwealth of The Bahamas and had also received in-principle approval for a banking licence in Mauritius. The company said the licence would be used to set up an all-new bank or consider an acquisition.

The company is also in the process of acquiring asset management and wealth management businesses to complete its para banking suite, the statement said.

The board also announced a special interim dividend of 10 per cent to shareholders, most of whom have stayed with the company for the past three decades.

The board also approved a buyback scheme for partial dilution for its original shareholders at USD 20.

RCap administrator is likely to file the IIHL resolution plan in the NCLT Mumbai this week as the deadline of July 15 to file is approaching. Operating companies under Reliance Capital are into insurance (life, general and health), asset reconstruction and broking. The Reserve Bank on November 29, 2021, superseded the board of Reliance Capital in view of payment defaults and serious governance issues and had appointed Nageswara Rao as the administrator.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)