IndusInd International Holdings Limited (IIHL), a Hinduja group company, is seeking to raise up to ₹8,000 crore from Japanese banks to finance its bid for Reliance Capital, formerly owned by Anil Ambani. The move comes ahead of the May 27 deadline set by a bankruptcy court to finalize the deal. IIHL's approach to Japanese banks is seen as a strategic move to secure financing at potentially lower interest rates, leveraging Reliance Capital's association with Nippon Life, a joint venture partner.
The discussions with Japanese banks, including Mizuho, SMBC, and MUFG, center around securing five-year loans at an interest cost of 8-9% per annum. This would represent a significant reduction in interest rates compared to other lenders, potentially providing cost-effective financing for the acquisition. However, the funding arrangements are yet to be finalized.
The Hinduja group had previously explored raising $1 billion from global private credit funds, but the interest rates offered by those sources were relatively high, at 15-16% per annum. By tapping into Japanese banks, IIHL aims to secure more favorable terms for financing the acquisition of Reliance Capital.
While IIHL may raise a significant portion of the required funds through this new financing route, the Hinduja family may need to inject additional equity to bridge any funding gap. The Hinduja group did not respond to queries regarding the matter, while Mizuho's executives were unavailable for comment, and MUFG and SMBC declined to comment.
Japanese financiers have been increasingly active in India, demonstrating a greater appetite for risk and providing funding for local businesses. Japanese banks have previously financed Indian corporates with foreign currency loan requirements, but their involvement in local financing has been expanding. Recent investments by Mizuho, MUFG, and SMBC in their Indian operations highlight their commitment to the Indian market and their willingness to provide substantial funding to support business activities.
