The Reliance Capital acquisition saga takes a new turn with a Hinduja group company reportedly securing funding from Japanese banks. This development could have significant implications for the stock prices of both Reliance Capital and the acquiring entity.
Reliance Capital, formerly under the Anil Ambani-led Reliance Group, has been undergoing insolvency proceedings. The Hinduja Group’s IndusInd International Holdings (IIHL) emerged as the frontrunner to acquire the company in July 2023. However, finalizing the deal hinged on securing the necessary funds.
According to reports, a Hinduja group entity has reached an advanced stage of discussions with non-banking financial company 360 One Prime (formerly IIFL Wealth Prime) for a loan of Rs 4,000 crore (approximately $480 million). This would partially finance the acquisition, which has a total value of Rs 9,650 crore (approximately $1.16 billion).
Potential Impact on Stock Prices
The news of Japanese bank involvement could positively influence the stock prices of both companies:
- Reliance Capital: Finalization of the acquisition could bring much-needed stability to Reliance Capital. Improved financial health under new ownership might lead to a rise in its stock price.
- Hinduja Group Company: Successfully acquiring Reliance Capital could be seen as a strategic win for the Hinduja group. This positive sentiment might translate to a boost in the acquiring company’s stock price.
Uncertainties Remain
While the Japanese bank funding is a positive development, some uncertainties linger:
- Regulatory Approvals: The acquisition still needs court and regulatory approvals, which could cause delays or even derail the deal.
- Loan Agreement Finalization: The final terms of the Rs 4,000 crore loan from 360 One Prime are yet to be finalized. Any unexpected conditions could impact the deal’s viability.
Investor Takeaway
The news of Japanese bank funding for the Reliance Capital acquisition is a significant development for both companies. However, investors should remain cautious until the deal is finalized and all regulatory approvals are secured. Closely monitoring further news and developments related to the acquisition is crucial before making any investment decisions.
