IIHL finalizes Reliance Capital acquisition, Eyes $50 billion valuation

After a protracted, three-year resolution process, IndusInd International Holdings Ltd (IIHL) has officially taken control of Reliance Capital (RCAP), marking a significant shift in India's financial services landscape. IIHL Chairman Ashok P. Hinduja confirmed the completion of the ₹9,650 crore transaction, with funds successfully transferred to the lender's escrow account. Management control transitioned from the administrator today.  

IIHL's strategic vision for RCAP includes a focus on maximizing the value of its insurance businesses, Reliance Nippon Life Insurance Ltd and Reliance General Insurance Ltd. Hinduja outlined plans to list these insurance units within the next two to three years, estimating their combined value at a conservative ₹20,000 crore. "The real journey of value creation begins now," Hinduja stated during a press briefing.  

Beyond the initial bid, IIHL injected an additional ₹200 crore to bolster RCAP's solvency, demonstrating its commitment to stabilizing the company's financial footing. The new management intends to conduct a comprehensive review of RCAP's extensive portfolio, which includes nearly 40 entities. A significant restructuring is anticipated, with the divestment of numerous smaller, non-core businesses. However, key operations such as broking and asset reconstruction will be retained.

"We will examine each entity and decide which ones align with our long term goals," explained Hinduja. "Many are small shell companies, and we will streamline the portfolio."

Addressing the concerns of RCAP's 1.28 lakh employees, IIHL pledged to protect their interests to the fullest extent possible. The integration of RCAP's operations with the IndusInd brand is expected to occur over the next six to nine months.  

This acquisition is a pivotal step in IIHL's ambitious growth strategy. The company is targeting a valuation of $50 billion by 2030, leveraging RCAP's established presence and diverse financial services offerings.  

The National Company Law Tribunal (NCLT) had set a deadline of March 20 for the completion of the acquisition, with further hearings scheduled for March 25, 2025. IIHL's successful bid, which received regulatory approvals from the Reserve Bank of India (RBI), the Insurance Regulatory and Development Authority of India (IRDAI), and relevant stock exchanges, culminates a complex resolution process that began in November 2021 when the RBI placed RCAP under administration due to governance issues and payment defaults