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Hinduja Group Initiates Bond Sale to Fund Reliance Capital Acquisition

24 June 20244 mins read by Angel One
Hinduja Group announces Rs.73 billion bond sale to acquire Reliance Capital for expansion, potentially revitalizing Reliance Capital and enhancing competition.
Hinduja Group Initiates Bond Sale to Fund Reliance Capital Acquisition
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The Hinduja Group has initiated a bond sale process aimed at raising Rs.73 billion (approximately $890 million) to facilitate its acquisition of Reliance Capital, marking a major move in the sector. The group is positioning itself to finalize this substantial deal, showcasing its plans to expand its footprint in the financial services industry.

Details of the Bond Sale

The bond sale is set to raise Rs.73 billion and this move is intended to secure the funds to acquire Reliance Capital. The issuance of bonds is offering the Hinduja Group a viable route to gather a considerable amount of capital without immediate dilution of equity. The bonds are expected to have varying maturities, catering to a diverse investor base.

Acquisition Overview

Reliance Capital has been navigating financial difficulties, finally leading to this potential acquisition. The firm was placed under the administration of the RBI in 2019 due to its inability to meet debt obligations, amounting to Rs.24,000 crore. This acquisition seems poised to offer a lifeline to Reliance Capital, enabling it to stabilize and potentially grow under new management.

Key Players and Timeline 

The Hinduja Group has enlisted Barclays Plc and 360 ONE to act as arrangers and underwriters for the bond issuance. According to the reports, these arrangers initiated the syndication process last week to attract investors, and the deal is expected to be finalized within a month.

Future Implications

The acquisition of Reliance Capital by the Hinduja Group is anticipated to have significant implications for the financial landscape. For the Hinduja Group, this move represents a major expansion, enhancing its portfolio and consolidating its position in the financial services market. The successful completion of this acquisition could lead to increased competition, potentially benefiting the consumers through improved services and products.

Market Reaction

The bond sale and acquisition have gathered attention from analysts and investors as the move is seen as a bold step by the Hinduja Group, reflecting confidence in the potential of Reliance Capital to recover and thrive under new ownership. Brokerage houses have noted that the restructuring and management capabilities of the Hinduja Group could significantly improve Reliance Capital’s current state.

Conclusion

The Hinduja Group’s decision to initiate a bond sale to fund the acquisition of Reliance Capital highlights the group’s ambition to expand and also signifies a potential turnaround for Reliance Capital. As the process unfolds, stakeholders and market participants will be keenly observing the impact of this acquisition as the infusion of Rs.73 billion is expected to be a game-changer, setting a new trajectory for Reliance Capital’s future.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.

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