IRDAI’s denial raises doubts over funding sources
Hinduja Group-led IIHL proposed to raise funds for Reliance Capital acquisition by pledging shares of Reliance General Insurance (RGIC) and Reliance Nippon Life Insurance (RNLIC)
Mumbai: After IRDAI rejected Hinduja Group-led IIHL’s proposal to raise funds for the Reliance Capital acquisition by creating a pledge over the shares of Reliance General Insurance (RGIC) and Reliance Nippon Life Insurance (RNLIC), the Reliance Capital Administrator has written to the IIHL, raising questions on the source of funds and business plan.
In a letter to IIHL, the Reliance Capital Administrator has asked the successful resolution applicant, IIHL to share the final executed change in control application with the insurance companies, along with the source of funds and the business plan, which do not contemplate the creation of pledge over the shares of RGIC and RNLIC, for onward submission to IRDAI.
The Administrator has written to IIHL that in their meeting with the IRDAI on October 9, IRDAI indicated that no application for change in control would be considered favourably if the source of the funds for the acquisition contemplates creation of pledge over the shares of an insurance company.
