The Department for Promotion of Industry and Internal Trade (DPIIT) has given a go-ahead to Hinduja Group firm IIHL for the acquisition of debt-ridden Reliance Capital Ltd (RCAP), sources said. DPIIT approval was required as some of the shareholders of IndusInd International Holdings Ltd (IIHL) are residents of Hong Kong, a special administrative region controlled by China. The approval was crucial as the Hinduja Group should close the transaction by the extended deadline of January 31, 2025.
The green signal from the DPIIT will help take forward the resolution plan submitted by Mauritius-based IIHL, which emerged as the successful bidder by submitting Rs 9,861-crore bid for the debt-ridden financial firm, sources said. The NCLT Mumbai on February 27, 2024, approved IIHL's resolution plan. DPIIT approval was part of the resolution plan which was put to vote and approved by 99.96 per cent of the Committee of Creditors (CoC).
According to Press Note 3, if an entity from a nation sharing a land border with India (China, Bangladesh, Pakistan, Bhutan, Nepal, Myanmar, and Afghanistan), or if a citizen or permanent resident of any such country is the beneficial owner of an investment in India, they are required to pursue investment through the government approval route.
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Failure to meet the acquisition deadline would require the group to return Rs 3,000 crore raised from high-net-worth individuals (HNIs), ultra-HNIs, and family offices for the deal. In November 2021, the Reserve bank of India (RBI) superseded the board of Reliance Capital on governance issues and payment defaults by the Anil Dhirubhai Ambani Group company. The central bank had appointed Nageswara Rao Y as the administrator, who invited bids in February 2022 to take over the company. Reliance Capital had a debt of over Rs 40,000 crore.
(Except for the headline, this story has not been edited by DNA staff and is published from PTI)
