IIHL- Reliance Capital Limited Acquisition

BRIEF BACKGROUND

The long-drawn USD 1.11 billion acquisition, of the debt-ridden Reliance Capital Limited (“RCap”) by IndusInd International Holdings Limited (“IIHL”) was formally completed on 18 March 2025¹. The transaction began with the RBI superseding RCap’s board in November 2021, following serious financial and governance concerns². RCap was admitted into insolvency proceedings under the Insolvency and Bankruptcy Code, 2016 (“IBC”) towards the end of 2021. 

The Committee of Creditors (“CoC”) approved IIHL’s resolution plan with an overwhelming 99.60% majority, and the plan subsequently received approval from the NCLT on 27 February 2024³. While the statutory 90-day implementation period was triggered thereafter, the transaction faced delays due to the complexity of the resolution, including the formulation of multiple restructuring proposals, the establishment of a Special Purpose Vehicle (“SPV”), and the need to obtain several regulatory approvals and filings. Additionally, IIHL was engaged in multiple litigations with various RCap stakeholders between February 2023 and September 2025, which further contributed to the prolonged timeline before the successful completion of the acquisition. 

The acquisition was structured through a combination of equity contribution by IIHL and debt financing raised from external lenders, with ~ USD 301 million comprising of the equity portion and ~ USD 799 million of the debt⁴. The resolution amount was paid into escrow and distributed to creditors in accordance with the waterfall mechanism under the IBC. The acquired entity is now a wholly owned subsidiary of IIHL i.e. IndusInd Capital Limited (formerly Reliance Capital Limited). It is registered as Non-Banking Financial Company, Core Investment Company (“CIC“) – Non-Deposit Taking Systemically Important (NBFC-CIC-ND-SI) under Section 45-IA of Reserve Bank of India Act, 1934.⁵ 

Details Of the Acquisition⁷

In essence, under the resolution plan, creditors recovered about 37% of their admitted claims, operational creditors received 5% and retail secured creditors were fully repaid. The equity shareholder of Rcap received no value as their shares were extinguished and IIHL took full ownership of RCap.

2. Insolvency and Bankruptcy Code, 2016: The resolution was governed by the IBC, which mandates strict timelines for completion of the Corporate Insolvency Resolution Process (“CIRP”) (extendable up to an outer limit of 330 days in exceptional circumstances)⁹ and prescribes eligibility norms for resolution applicants¹⁰. The approved resolution plan was required to comply with statutory distribution principles, including payment of CIRP costs in priority, minimum protection to operational and dissenting financial creditors in line with the liquidation waterfall mechanism, and fairness in allocation.¹¹ Upon NCLT approval and a complete change in control, IIHL (the acquirer) benefitted from statutory immunity for pre-resolution offences. Liability for past misconduct is shifted to the individuals responsible, i.e. promoters, officers, or anyone directly involved in the offence and the new management gets a clean slate start.¹²

3. SEBI (Delisting of Equity Shares) Regulations, 2021: As part of the approved resolution plan, the equity shares of RCap were delisted from stock exchanges. This ensured that existing shareholders’ equity was extinguished, and no mandatory delisting offer was required because the resolution plan contemplated cancellation of the existing share capital.¹³ Thus, RCap ceased to be a publicly traded company. Existing equity shareholders received no consideration given their nil liquidation value under the resolution plan.

4. Insurance Regulatory and Development Authority (“IRDAI”) Approval: IRDAI approvals were a mandatory regulatory checkpoint because the transaction involved a change in control of three regulated insurance entities:
   • Reliance General Insurance Company (RGIC)
   • Reliance Nippon Life Insurance Company (RNLIC)
   • Reliance Health Insurance Limited (RHIL)

Under the Insurance Act, 1938 (“Insurance Act”) read with IRDAI (Registration of Indian Insurance Companies) Regulations, any acquisition resulting in a direct or indirect transfer of shareholding above 5% or a change in promoter/control cannot be affected without prior IRDAI approval.¹⁴ This approval is based on “fit and proper” evaluation of the incoming sponsor, financial soundness, capital adequacy, and solvency assurance under the new ownership structure, governance transition, including board composition, independence thresholds, and key managerial personnel changes, ring-fencing policyholder interests and long-term viability of the insurance subsidiaries.¹⁵ 

OUR THOUGHTS 

The successful acquisition of RCap by IIHL demonstrates a textbook application of the IBC framework, delivering a structured resolution that not only balances creditor interests, but also decisively clears legacy liabilities. By Providing a genuine clear “clean slate” for the incoming management and ensuring seamless regulatory and operational continuity, the transaction sets a powerful precedent for structured, value-driven turnarounds in India’s financial sector.

The information contained in this document is not legal advice or legal opinion. The contents recorded in the said document are for informational purposes only and should not be used for commercial purposes. Acuity Law LLP disclaims all liability to any person for any loss or damage caused by errors or omissions, whether arising from negligence, accident, or any other cause. 

1. Article by Live Mint dated March 18, 2025 (can be accessed at  IIHL completes acquisition of Reliance Capital, insurance units of debt-ridden firm to be listed in 2-3 years: Report | Stock Market News ) ↩︎
2. RBI Press Release dated November 29, 2021 (can be accessed at https://www.vistraitcl.com/sites/default/files/RBI%20PRESS%20RELEASE-Reliance%20Capital%20Limited.PDF?) ↩︎
3. NCLT order dated July 23, 2024 (can be accessed at https://nclt.gov.in/gen_pdf.php?filepath=/Efile_Document/ncltdoc/casedoc/2709138123792021/04/Order-Challenge/04_order-Challange_004_172181418952624321066a0ccad5609c.pdf ) ↩︎
4. Article by Business Standard dated December 15, 2024 (can be accessed at https://www.business-standard.com/companies/news/iihl-s-takeover-of-reliance-capital-set-to-complete-by-january-end-124121500443_1.html?) ↩︎
5. ‘About Us’ by IndusInd Capital (can be accessed at https://www.reliancecapital.co.in/aboutus ) ↩︎
6. NCLT order dated July 23, 2024 (can be accessed at https://nclt.gov.in/gen_pdf.php?filepath=/Efile_Document/ncltdoc/casedoc/2709138123792021/04/Order-Challenge/04_order-Challange_004_172181418952624321066a0ccad5609c.pdf ) ↩︎
7. Ibid. ↩︎
8.  Escrow deadlock stalls Reliance Capital deal, IIHL seeks NCLT guidance, February 26, 2025 (can be accessed at Escrow deadlock stalls Reliance Capital deal, IIHL seeks NCLT guidance – The Economic Times ) ↩︎
9. Section 12 of the Insolvency and Bankruptcy Code, 2016 ↩︎
10. Section 29A of the Insolvency and Bankruptcy Code, 2016 ↩︎
11. Section 30 read with Section 53 of the Insolvency and Bankruptcy Code, 2016 ↩︎
12. Section 32A of the Insolvency and Bankruptcy Code, 2016 ↩︎
13. Reliance Capital Annual Report 2024-2025, page 22 (can be accessed at https://reliancecapital.co.in/PDF/Reliance_Capital_Annual_Report_2024_25.pdf) ↩︎
14. Section 6A of the Insurance Act, 1938 read with Regulation 3 of the IRDAI (Transfer of Equity Shares of Insurance Companies) Regulations, 2015 ↩︎
15.  Section 6A of the Insurance Act, 1938 read with Regulation 6 of the IRDAI (Transfer of Equity Shares of Insurance Companies) Regulations, 2015 ↩︎