Hinduja's offer to infuse Rs 300 cr more in Reliance General Insurance

Group's total bid hiked to Rs 10,000 crore; CoC of RCap to meet senior Hinduja officials

The Hinduja group has offered to invest an additional Rs 300 crore in Reliance General Insurance, which is a unit of Reliance Capital and requires urgent cash infusion to maintain its solvency levels.

Hinduja-owned IndusInd International Holdings Ltd (IIHL), in a second auction on Wednesday, made the highest bid of Rs 9,650 crore for Reliance Capital. Reliance General Insurance had sought Rs 600 crore of urgent fund infusion from lenders in December last year to meet solvency requirements of the insurance regulator, IRDA. The lenders earlier rejected the call for fund infusion from their kitty, passing on the burden for the general insurance firm to the incoming investor.

While Hindujas have offered to invest Rs 300 crore in Reliance Capital, the bid amount of Rs 9,650 crore will go to lenders who had lent Rs 24,000 crore to the bankrupt company. The Committee of Creditors (COC) of Reliance Capital will on Friday hold a meeting where the top officials of the Hinduja group will make a presentation on its resolution plan.

Reliance Capital owns a 51 per cent stake in Reliance Nippon Life Insurance and 100 per cent in Reliance Nippon General Insurance. It also owns a stake in a stock broking firm called Reliance Securities, an asset reconstruction company, a health insurance company, and 20 per cent stake in Indian Commodity Exchange. Of these, the two insurance companies are making profits.

What RCap owns

• 100% stake in Reliance General Insurance
• 51% stake in Reliance Nippon Life Insurance
• Stock broking firm Reliance Securities
• Reliance Asset Reconstruction Company
• Reliance Health Insurance
• 20% stake in Indian Commodity Exchange

The Hinduja group has a presence in the financial services sector through its stakes in Indusind Bank and Hinduja Leyland Finance, a non-banking finance company owned by its vehicle manufacturing firm, Ashok Leyland.

The group has a housing finance business which is core to its strategy to increase its presence in the financial services. At a consolidated level, as on December 31, 2022, the AUM (assets under management) of Hinduja Leyland Finance stood at Rs 33,353 crore as against Rs 30,048 crore as on March 31, 2022 of which the housing finance business accounted for 18 per cent.

"If the Supreme Court clears the Hinduja acquisition then it would give a significant presence to the group in the financial services sector," said a banking source.

The source said in addition to Rs 9,650 crore, the company has also offered Rs 300 crore capital infusion in Reliance General Insurance, and another Rs 50 crore for other expenses.

This takes the total value of IIHL's bid to Rs 10,000 crore. The total Hinduja bid is Rs 1,900 crore more compared to its own bid of Rs 8,110 crore in the first challenge mechanism.

Torrent, which decided to skip the second auction, had offered Rs 8,640 crore in the first auction.

When compared to Torrent's highest bid of Rs 8,640 crore in the first challenge mechanism, the new Hinduja bid is higher by Rs 1,380 crore. Torrent has moved the Supreme Court on banks' plans to launch a second auction. The matter will be heard in August.