After RCap buy IIHL eyes $50bn valuation for BFSI biz by 2030

Mumbai: IndusInd International Holdings (IIHL) aims to establish a banking, financial services, and insurance (BFSI) portfolio worth $50bn (Rs 4.2 lakh crore) by 2030. This includes its investment in IndusInd Bank and new business under Reliance Capital, for which IIHL has won the bid under bankruptcy proceedings.

IIHL has completed the necessary regulatory formalities to increase its stake in the bank from 15% to 26%, which it will do in phases, according to IIHL chairman Ashok Hinduja. "We have received a letter stating that the increase in stake (from 15% to 26%) will be cleared after we follow the process. We have submitted the 'A' form, which is a requirement, and the proposal has been approved by the bank board and sent to the regulator. Once we have completed this, we plan to increase our stake from the market and by subscribing to the banks capital," said Hinduja. He added that the increase in the bank's capital will also be done in phases.

Besides the bank, IIHL owns Sterling Bank & Trust , Bahamas. and is a minority stakeholder of securities exchange AFRINEX in Mauritius wealth manager Beryllus Capital in Singapore, Switzerland & United Kingdom. " IIHL has consistently satisfied the "Fit and Proper" criteria of several authorities, RBI, Sebi and Central Bank of Bahama," said Hinduja.

IIHL has won the bid for Reliance Capital with a Rs 9661 crore offer. Hinduja said that the payment to lenders will be made as soon as IRDAI approves the deal. "We have a letter from our bankers indicating their willingness to extend Rs 7500 crore for the purchase. The 25% equity is being brought by an IIHL subsidiary, through an investor," said Hinduja.

Post-acquisition, IIHL plans to relaunch and grow Reliance Health Insurance, which had been licensed to Reliance Capital but not launched. Additionally, IIHL will also grow Reliance Securities and Reliance Asset Reconstruction but will exit a few real estate businesses with RCap.

IIHL, which was formed by a group of non-residents led by SP Hinduja, was the first to be given a licence to set up IndusInd Bank in 1993. To provide these investors an exit, IIHL will seek a listing on the Afrinex Exchange in Mauritius, where BSE and the Hinduja family have a stake.

Once of the incentives for growing businesses within Reliance Capital is the Rs 40,000 of past losses incurred by the company prior to the resolution which will bring down future tax liability.

Hinduja said that IIHL has addressed all the issues required for clearance from the insurance regulator. The company has also received a welcome letter from Nippon Life, the joint venture partner in Reliance Life. Hinduja said that IIHL has the rights to continue using the 'Reliance' brand for three years after the acquisition.

To comply with the FDI norms in insurance, IIHL plans to bring in Ashok Hinduja's Aasia Enterprises as a partner. "In the Hinduja family, my wife, son and I hold Indian passports. In insurance, there is a requirement for an Indian citizen company. But these are non-listed companies," he said. Post-acquisition, IIHL will introduce fresh ESOPs for employees of the group companies.