IRDAI approves transfer of 26% shares in Reliance Capital Insurance arm to Hinduja Group's Asia Enterprises

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The Insurance Regulatory Development Authority of India (IRDAI) on May 10 approved the transfer of 26 per cent stake in debt-ridden Reliance Capital's insurance arm, Reliance Nippon Life Insurance Company (RNLIC) to Hinduja Group company Asia Enterprises, Moneycontrol has learned. Gave it.

RNLIC is a joint venture (JV) between Reliance Capital and Nippon Life of Japan. According to RNLIC's annual report for financial year 2022-23, Reliance Capital is the majority stakeholder with 51 per cent and the remaining 49 per cent is owned by Nippon Life.

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As per the IRDAI approval, Hinduja will have to complete the share purchase in RNLIC within a period of three months from the date of approval. Post the transaction, as per IRDAI terms, Reliance Capital, Nippon Life Insurance and Asia Enterprises LLP will continue to be the promoters of the company.

In response to Moneycontrol queries, a spokesperson for IndusInd International Holdings Ltd said: “We are pleased to receive the approval from IRDAI on the auspicious occasion of Akshaya Tritiya tomorrow, May 10, 2024. The approval is subject to certain 'regulatory, statutory and judicial' clearances/compliance.

The company further said that it is committed to work towards achieving this as soon as possible and aims to close the transaction by the NCLT deadline of May 27, 2024.

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According to sources familiar with the matter, the deal will have to be completed by the stipulated deadline, otherwise it will be considered a default.

According to IRDAI, once the share transfer is completed, the insurance company must submit the details of the share transfer to IRDAI.
Earlier, IRDAI had expressed some reservations on the proposed framework for Reliance Capital's insurance subsidiaries. IRDAI, in a letter to Reliance Capital administrator Nageswara Rao Y, has sought the proposed structure for the acquisition of Reliance Capital's insurance subsidiaries. The sector regulator is of the opinion that promoters should invest their capital as insurance companies deal with policyholders' money and as a regulator the safety of policyholders is the top priority.

The transfer of ownership to Asiya Enterprises came as the group was looking to sell a part of its stake in the general insurance arm to Asiya Enterprises to comply with regulatory norms on foreign ownership in the insurance sector. Regulatory guidelines limit foreign ownership in Indian insurance companies to 74 percent of the equity share capital.

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IIHL Chairman Ashok Hinduja said at a media briefing in Mumbai on May 5 that the company will close the Reliance Capital transaction in the required timeline after getting the green signal from IRDAI. I hope that the approval will be given as soon as possible. Generally, the approval process takes two to three months. The original information (application) was submitted in November, 2023. So, if we check the timeline, we would say that whatever information was required by IRDAI was provided from November itself. So, I think they will move faster in the approval process. If you ask me, are we ready for the 27th? We are also ready for May 15.”

Emails sent to IRDAI, Reliance Capital and RNLIC remained unanswered till the time of filing this copy.

Also read: IIHL targets $50 billion valuation for BFSI portfolio by 2030; Expecting early approval from IRDAI for RCAP purchase: Ashok Hinduja

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