Reliance Capital Moves for Share Delisting: What It Means for Shareholders?

Reliance Capital has filed for delisting of its shares and non-convertible debentures with the BSE and NSE as part of the resolution process. IndusInd International Holdings won the ₹9,650 crore bid, adding ₹200 crore to bolster solvency, the company said in a press release on the stock exchange.

As per news reports, once the delisting of shares is completed, cash will be distributed to RCAP debt holders.

Debt Crisis and the Resolution Process

Facing a massive debt burden of over ₹40,000 crore, Reliance Capital had received 4 bids for its resolution. However, the creditors committee rejected the first round of bids due to lower offer prices, leading to a challenging process.

Both IIHL and Torrent Investments entered the contest to secure the acquisition. In November 2021, the Reserve Bank of India (RBI) took charge, superseding the board of RCAP and appointing an administrator to handle the insolvency proceedings.

NCLT Approval and Timelines

The resolution plan by IIHL was approved by the National Company Law Tribunal (NCLT) in February 2024, setting the stage for the completion of the acquisition. The deadline for finalising the transaction was extended to January 31, 2025.

As per news reports, IIHL’s Chairman, Ashok P Hinduja, expressed optimism that most of the regulatory approvals had been processed, and he anticipates the completion of the transaction within the next 4-6 weeks.

RCAP’s Key Assets and Future Plans

Reliance Capital owns a wide range of entities under its umbrella, including Reliance Nippon Life Insurance, Reliance General Insurance, Reliance Money, and more. These assets are expected to be integrated into IIHL’s expanding portfolio.

The divestment of these assets will play a crucial role in the future growth and profitability of the Hinduja Group’s financial services sector.

Reliance Capital Share Price

Reliance Capital’s trading has been restricted due to the ongoing Insolvency and Bankruptcy Code (IBC) process, with the stock suspended for procedural reasons.

It is expected to resume trading once the resolution is complete; as of February 26, 2024, it stood at ₹11.79, down ₹0.55 (-4.46%), reflecting the company’s financial struggles during its restructuring efforts.

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