In a significant development for the Indian insurance sector, the Insurance Regulatory and Development Authority of India (Irdai) has granted approval for the acquisition of Reliance Capital’s insurance companies by a consortium led by IndusInd International Holdings Limited (IIHL) and its Indian associate companies.
IIHL, a Mauritius-based firm, expressed its delight in receiving the approval from Irdai, which came on the auspicious occasion of Akshay Tritiya. The approval, though subject to certain regulatory, statutory, and judicial clearances/compliances, marks a crucial step towards the finalization of the acquisition. A spokesperson from IIHL stated that they are committed to swiftly obtaining these clearances and aim to close the transaction by the National Company Law Tribunal’s stipulated date of May 27th, 2024.
“We extend our gratitude to all stakeholders, including regulators and administrators, for their timely support throughout this process,” the spokesperson added.
IndusInd International Holdings Ltd (IIHL) had previously restructured the consortium to meet the regulatory requirements, introducing four new India-based entities: Cyqure India, Ecopolis Properties, Cyqurex Technologies, and IIHL BFSI Holding. This restructuring enabled the consortium to adhere to the foreign direct investment (FDI) ceiling of 74% for the insurance sector.
Under the new structure, Cyqure India serves as the holding company of Aasia Enterprises, with shareholders Ashok Hinduja, Harsha Hinduja, and Shom Hinduja, all holding Indian passports. Additionally, Cyqurex Technologies and Ecopolis Properties are now 100% subsidiaries of Aasia Enterprises, while IIHL BFSI Holding is fully owned by IIHL.
Irdai had previously raised concerns regarding IIHL’s majority stake in Reliance Capital, which holds 51% in Reliance Nippon Life Insurance Company (RNLIC), with Nippon Life of Japan holding the remaining 49%. Reliance Capital also holds 100% ownership in general insurance.
This acquisition marks a significant milestone in the Indian insurance sector, signaling increased consolidation and investment. It highlights the industry’s resilience and adaptability amid evolving regulatory landscapes. The consortium’s commitment to regulatory compliance underscores the importance of adherence to guidelines for ensuring a smooth transition and maintaining trust in the sector.
The successful acquisition is poised to bring synergies and innovations to the insurance market, benefiting stakeholders and policyholders alike. It sets a precedent for future acquisitions and collaborations in the sector, fostering growth and competitiveness. With the impending closure of the transaction, all eyes are now on the consortium as it navigates the final regulatory hurdles towards a transformative merger in the Indian insurance landscape.
