Reliance Capital News Today, 21 December 2024
IndusInd International will fund Rs 4,300 crore to complete the Reliance Capital buyout.
Within two years, the company intends to separate Reliance Capital’s life and general insurance units.
The Hinduja Group investment firm is proposing a 15% annual return, or coupon rate, on the NCDs, which will be secured against Reliance Capital shares with RBI clearance, according to sources.
In December 2023, the Competition Commission of India (CCI) permitted IndusInd International Holdings, IIHL BFSI (India), and Aasia Enterprises LLP to acquire a stake in Reliance Capital.
Why are private credit funds not comfortable offering funds at lower yields for this acquisition?
Private credit funds are hesitant to offer lower interest rates for the Hinduja Group’s acquisition of Reliance Capital due to the risky nature of the collateral being offered.
Reliance Capital is a bankrupt company currently in insolvency proceedings, making it difficult for the funds to lend at lower rates.
They are demanding higher interest rates and better covenants due to the higher risk profile of lending against assets from a bankrupt company.
Private credit funds aim to compensate for the higher perceived risk through higher interest rates on the loan.