IndusInd International Holdings Limited (IIHL), the promoter of IndusInd Bank, India’s fifth-largest private bank, is raising capital by up to $1.5 billion to meet its strategic global expansion.
Speaking to Khaleej Times, Ashok P. Hinduja, chairman of IIHL, which emerged as the highest bidder for Reliance Capital (RCap) in the recently concluded auction, said the twin objectives of the expansion include funding the acquisition and increasing the company’s shareholding in IndusInd Bank.
The Mauritius-based company has 300 shareholders in the UAE. Its board took the decision to expand its business horizon in India and other global geographies, particularly in the BFSI (banking, financial services and insurance) sector at a meeting held in Dubai on Monday.
“This strategic decision opens boundless opportunities to expand our BFSI presence and aligns with our vision to be global financial services institution with a commitment to excellence in international orientation, innovation, speed and strict compliance with the principles of good corporate governance. Our aspirations will not be capital constrained as raising capital for IIHL is not an issue at all,” Hinduja said.
In terms of Reserve Bank of India guidelines on ‘Acquisition and Holding of shares or voting rights in banking companies’, the promoters of IndusInd Bank Limited are eligible to increase their shareholding in IndusInd Bank from the current level of 15 per cent to 26 per cent by following the procedure laid down subject to the assessment of ‘fit and proper’ status by RBI, Hinduja explained. “Accordingly, the board of directors of IIHL have resolved to undertake capital raise in a phased manner to mobilise the required funds for infusion,” he said.
On Monday, IIHL obtained the Letter of Intent from the administrator of the debt-ridden Reliance Capital owned by Anil Ambani. IIHL was the sole resolution applicant with a bid amount of $1.2 billion (Rs96.5 billion).
Investment consultants said the huge difference in the acquisition cost and fair value of Reliance Capital pegged at Rs130 billion and Rs170 billion respectively makes the deal highly attractive for the Hinduja Group and lenders as well. The underlying operating companies in Reliance Capital are in insurance (life, general, and health), asset reconstruction, broking, etc, and augur well to meet IIHL’s aspirations in the BFSI sector.
IIHL is a holding investment arm of the Hinduja Group, headquartered in the UK. With a net asset value of $1.67 billion, the company has investments in a wide range of services and sectors, including IT, housing loans, vehicle finance, and media services.
Hinduja said several global sovereign/private equity funds have expressed interest in participating in IIHL’s growth story. He said IIHL is likely to be listed by the second or third quarter of next year and “this would also give a trading option to our shareholders who have stayed with the company for over three decades”.
“We have recently acquired a majority holding in a bank in the Commonwealth of The Bahamas and has also received an in-principle approval for a banking licence in Mauritius, thereby exploring options to set up a greenfield bank or consider inorganic acquisition. The company is also in process to acquire asset management and wealth management businesses in order to complete its BFSI (para banking) suite,” said Hinduja.
He said the IIHL board is celebrating 30 years of its investment in banking and has recommended a special interim dividend of 10 per cent to reward its shareholders. The board has also approved a buyback scheme for partial dilution for its original shareholders at $20 (face value of $1). The buyback offer letter is to be shared in due course.
As per the Forbes rating of 2022, the Hinduja brothers, with a net worth of $15.2 billion, are ranked as the 8th richest Indians. The Sunday Times UK Rich List 2022 has ranked the Hinduja family the wealthiest people in Britain with an estimated wealth of £28 billion.
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