IIHL plans to borrow Rs 4,300 crore via NCDs for Reliance Cap buy
IndusInd International Holdings (IIHL) plans to borrow ₹ 4,300 crore for the Reliance Capital acquisition through a non-convertible debenture (NCD) issue.
Reliance Capital is currently undergoing the corporate insolvency resolution process, with Nageswara Rao Y appointed as administrator by the Reserve Bank of India under the provisions of the Insolvency and Bankruptcy Code, 2016, following an NCLT Mumbai bench order of December 2021.
On February 27, 2024, the NCLT approved IIHL's resolution plan of ₹9,650 crore and asked them to close the acquisition by May 27, 2024. However, IIHL sought a further extension of 90 days.
IIHL has been looking to arrange funds to close the acquisition while seeking necessary regulatory approvals. Part of the debt is being raised from the domestic market and part from global private credit funds. As per the proposed NCD structure, the proceeds from the sale of shares in underlying insurance companies will form part of the security for debenture holders and cash flows will be directed into an escrow account, dedicated to debenture repayment.
The rating for the issue will depend on a structure secured by a first-ranking security charge on all assets, including future cash flows from dividends, shareholder loan repayments, or asset sales, according to Care Ratings.
As per the covenants of the NCD, IIHL will have to retain at least 51% shareholding and voting rights in IIHL BFSI (India), an indirect special-purpose vehicle (SPV) of IIHL, and a put option agreement obligating IIHL BFSI
