In a major development that will impact shareholders and the financial sector, Reliance Capital has announced plans to delist or remove its shares from stock exchanges. Here are the key details of this important development:
Reliance Capital, which has been under insolvency proceedings for over a year due to debt issues, informed exchanges on Tuesday that the resolution plan approved by the National Company Law Tribunal (NCLT) proposes to delist the company’s existing shares.
In its regulatory filing, Reliance Capital stated that as per the NCLT order and SEBI delisting regulations, the shares of the debt-laden financial firm will be removed from trading on stock markets.
This comes as a big setback for existing shareholders of Reliance Capital. As per the approved plan, the liquidation value or payment amount for shareholders has been determined to be nil. This effectively means that equity investors in the company will not receive any compensation.
Further, in a major action, the NCLT approval order has proposed cancelling the entire existing share capital of Reliance Capital without providing any consideration to shareholders. This implies that the shares will lose all value.
Once the delisting process is complete, Hinduja group firm IndusInd International Holdings and its nominee entities will become the sole owners of Reliance Capital. They will acquire the company as part of the approved resolution plan.
Stock exchanges will now initiate necessary procedures to formally delist and remove Reliance Capital shares from trading counters as per applicable regulations and the resolution plan sanctioned by the NCLT.
This move is aimed at fully implementing the approved plan that has been formulated after detailed insolvency proceedings against Reliance Capital over the past year.
As per its latest financial reports, Reliance Capital had total assets worth over Rs 12,000 crore as of March 2023. Under the resolution plan, the debt-ridden company will continue operations on a going concern basis post-acquisition.
The insolvency proceedings against Reliance Capital were initiated last year after the Reserve Bank of India superseded its board in November 2021 due to various governance and repayment issues. Subsequently, the central bank had approached the NCLT for insolvency resolution.
After inviting bids, four resolution plans were submitted initially for taking over Reliance Capital. However, all were rejected by lenders due to low offer amounts. Later, IndusInd International Holdings emerged as the winning bidder with a Rs 9,661 crore offer for the stressed company.
In June this year, the NCLT approved the Rs 9,661 crore bid by the Hinduja group firm following lengthy proceedings. With the latest announcement, the final steps of delisting Reliance Capital shares are set to be implemented.
This marks the culmination of the insolvency process for Reliance Capital, which was once a major player in India’s financial services space. The delisting move will have repercussions for existing shareholders while paving the way for the new acquirer to fully take over operations of the debt-ridden company.
