Hinduja Group Plans to Increase Stake in IndusInd Bank Through New Fundraise

According to a news report, the Hinduja Group’s plan through IndusInd International Holdings Ltd (IIHL) to raise capital for increasing its stake in IndusInd Bank. It covers the background of the fundraise, current challenges at IndusInd Bank, and the strategic financial steps taken by IIHL. 

Background of IndusInd Bank Promoter Stake

IndusInd Bank’s promoter entity, IndusInd International Holdings Ltd (IIHL), is in early discussions with long-term investors such as sovereign wealth funds and pension funds. The purpose is to raise fresh capital by issuing new shares. The move aims to increase the Hinduja Group’s holding in the private sector bank. Currently, IIHL and IndusInd Ltd hold a combined 15% stake in IndusInd Bank, with IIHL alone owning 12.06% as of March 2025.

IIHL has received in-principle approval from the Reserve Bank of India (RBI) in March 2023 to increase its stake to 26%. To date, IIHL has raised about $100 million through a rights issue last year to facilitate increasing its shareholding from 15% to 20%.

Current Financial Challenges at IndusInd Bank

IndusInd Bank is facing significant difficulties due to an accounting crisis and falling share prices. In March 2025, the bank disclosed discrepancies amounting to ₹2,100 crore in its derivatives portfolio for the period ending December 2024. This prompted an internal review and a forensic audit. Subsequently, both the chief executive officer and deputy CEO resigned from their positions.

Since the announcement of these discrepancies, IndusInd Bank’s share price has declined. The bank’s ongoing regulatory and accounting issues have raised concerns among investors and stakeholders.

Objectives of the New Fundraise 

The capital raised by IIHL in the current round will serve multiple purposes. Primarily, the company intends to use part of the funds to increase its stake in IndusInd Bank. Additionally, IIHL plans to repay some debt incurred during the acquisition of Reliance Capital, which was completed earlier in 2025.

The exact amount IIHL aims to raise remains undisclosed. Barclays is reportedly engaging with potential investors on behalf of the Hinduja Group to facilitate the capital raise.

Read More: Mutual Funds Raise Stakes in 10 Large-Cap Nifty500 Stocks in Q4 FY25. 

Historical Context and Financial Position of IIHL

Established in 1993 to acquire a banking licence, IIHL is a closely held company with approximately 583 shareholders, mainly non-resident Indians (NRIs). The entity’s income primarily comes from dividends paid by IndusInd Bank.

Over the past six years, IIHL has raised capital through multiple rights issues. As of the most recent reports, its paid-up capital stood at $42 billion, with a net worth of $2.5 billion. However, due to the decline in IndusInd Bank’s share price, IIHL’s book value has dropped from $90 billion to around $35 billion.

Acquisition of Reliance Capital and Debt Management

IIHL completed the acquisition of Reliance Capital in March 2025, nearly 2 years after becoming the successful resolution applicant through insolvency proceedings. The acquisition deal was valued at ₹9,650 crore. The Hinduja Group raised ₹7,300 crore via debt and financed the remaining amount through equity.

Conclusion

IIHL’s efforts to increase its stake in IndusInd Bank come amid significant regulatory and financial challenges for the bank. With approval from the RBI and engagement with global investors, IIHL aims to strengthen its position while managing debt from recent acquisitions. This move highlights the strategic financial manoeuvres by the Hinduja Group in the evolving banking sector landscape.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks. Read all the related documents carefully before investing.