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Hinduja group-owned IndusInd International Holdings Ltd (IIHL), the promoter of IndusInd Bank, announced on Monday its plans to raise $1.5 billion (about Rs 12,300 crore) to increase its stake in the lender to 26 per cent from the current 15 per cent as well as fund its proposed acquisition of debt-laden Reliance Capital.
IIHL said in a statement that the strategic decision of its board “opens boundless opportunities” to expand its business horizon in India and other global geographies in the banking, financial services and insurance (BFSI) sector. “Our aspirations will not be capital constrained as raising capital for IIHL is not an issue at all,” Ashok P Hinduja, chairman of IIHL, was quoted as saying in the statement.
The promoters of IndusInd Bank are eligible to increase their shareholding in the bank, subject to the assessment of ‘fit and proper’ status by the Reserve Bank of India (RBI). Accordingly, the board of directors resolved to “undertake capital raise in a phased manner” to mobilise the required funds for infusion, the statement said.
In November 2021, the RBI allowed promoters to hold up to 26 per cent stake in banks, up from the previous cap of 15 per cent. The decision came following recommendations from an internal working group, which had reviewed the ownership and corporate structures of private sector banks.
Referring to Reliance Capital’s acquisition, IIHL said the administrator of the company had issued the duly signed letter of intent.
IIHL was the sole resolution applicant for Reliance Capital, which is undergoing insolvency proceedings, with a bid amount of $1.2 billion (about Rs 9,650 crore). The underlying operating companies in Reliance Capital are in insurance (life, general and health), asset reconstruction, and broking.
Global sovereign and private equity funds have expressed interest in participating in IIHL’s growth story, the statement said. The company is likely to be listed by next year, and this would also give a trading option to its numerous shareholders who have stayed with the company for over three decades, it added.
IIHL recently acquired a majority holding in a bank in the Bahamas. It has also received an in-principle approval for a banking licence in Mauritius, giving it an opportunity to explore options to set up a greenfield bank or consider inorganic acquisition.
The company was also in process of acquiring asset management and wealth management businesses to complete its BFSI suite.
The IIHL board has recommended a special interim dividend at the rate of 10 per cent to reward its shareholders, coinciding with 30 years of investment in banking. The board has also approved a buyback scheme for partial dilution for its original shareholders at $20 (face value of $1), and the buyback offer letter will be shared in due course, IIHL said.
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