The Hinduja Group is ramping up its efforts to acquire bankrupt Reliance Capital, with Barclays Capital taking the lead in the second tranche of a high-yield rupee bond offering, three people with knowledge of the deal said, asking to remain anonymous. The group aims to raise a total of ₹4,300 crore (approximately $515 million) to fund the acquisition, which was approved by the National Company Law Tribunal (NCLT) but has faced delays due to regulatory hurdles and funding challenges.
Barclays is underwriting ₹1,500 crore of the bond jointly with wealth manager 360One, while managing the remaining ₹2,800 crore independently, said one of the three people cited above. The global investment bank is expected to subscribe to ₹800- ₹1,000 crore of the issue before downselling to a mix of institutional investors including Allianz, Bank of America (BofA), JP Morgan, and Edelweiss’ Special Opportunities Fund.
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Other expected participants include PAG, Varde, and Standard Chartered, this person added. Institutional cheque sizes will likely range from $25 million to $70 million.
The tranche is expected to be finalized within the next 2-3 weeks, according to the second of the three people cited above.
The bond is aggressively priced at a 15% coupon rate, according to bankers.
“The bond is aggressively structured at a coupon rate of 15%, which is lower than what many of the market participants were expecting at 16-17%,” said an official at a private credit fund.
The second tranche of bonds will be issued by Indusind Holdings Ltd (IIHL-BFSI), an offshore entity of the Hinduja Group, against collateral of ₹2,500 crore of unencumbered listed shares of Indusind Bank.
“Barclays is yet to come out with a term sheet. But investors are betting on the approvals from regulators and the comfort of Indusind Bank shares to subscribe to these bonds. However, in the event of any default by the group, investors will find it difficult to monetise the shares of the bank as it’s held by an offshore entity and foreign exchange regulations do not allow that,” said the head of a wealth management firm.
Earlier this week, 360One arranged the first tranche of ₹3,000 crore in bonds for Hinduja’s special purpose vehicle Cyqure, with investments from family offices, high-net-worth individuals (HNIs), and domestic entities like Tata Capital and Motilal Oswal.
“It is unclear if it is a good idea to sell this product to high-networth-individuals directly. They may not appreciate the risk involved,” the third of the three people cited above said.
While Barclays declined to comment, emails to 360 One, Hindujas, BofA, JP Morgan, Standard Chartered Bank, Allianz, Varde, and PAG went unanswered.
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Lessons from Shapoorji Pallonji Group’s bond offering
The Hinduja bond deal bears resemblance to last year’s massive ₹14,300 crore bond issuance by Shapoorji Pallonji Group’s Goswami Infratech Pvt Ltd (GIPL), which was secured against shares of Tata Sons and Afcons, and came with an 18.75% coupon.
Despite strong initial demand from HNIs, family offices, and institutional investors, the SP Group has struggled to meet coupon payments, prompting a request for an extension from bondholders. Ratings agency Care downgraded GIPL’s bonds earlier this year, citing refinancing risks and weak operating cash flows.
The Hindujas are acquiring Reliance Capital, including its two insurance subsidiaries, for an upfront payment of ₹9,650 crore.
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Despite receiving approval from the NCLT, the group has faced delays in securing funding and regulatory approvals, missing the initial deadline for implementation. Lenders have filed a petition with the National Company Law Appellate Tribunal, seeking 16.6% interest on the delayed payment. The court has instructed the Reserve Bank of India and the Department for Promotion of Industry and Internal Trade to expedite the necessary approvals to close the acquisition.