Reliance Capital to exit mutual fund business

Currently both the partners, Reliance Capital and Nippon Life Insurance, hold 42.88 per cent each in the company, while the rest is with public shareholders.

Reliance Capital on Thursday announced it has signed binding definitive agreements with Nippon Life Insurance of Japan to exit its stake in Reliance Nippon Life Asset Management (RNAM). Reliance Capital will sell its entire stake of 42.88 per cent in RNAM to Nippon Life Insurance and other financial investors and will receive approximately Rs 6,000 crore through the sale.

Currently both the partners, Reliance Capital and Nippon Life Insurance, hold 42.88 per cent each in the company, while the rest is with public shareholders.

The company, in its release, said pursuant to the agreements, Nippon Life will also make an open offer to public shareholders of RNAM at Rs 230 per share, as required under Sebi regulations, and reach the maximum permissible promoter shareholding of 75 per cent for listed companies.

The transaction price represents a premium of 15.5 per cent to the minimum 60-day price as specified under the Sebi takeover regulations.

Senior officials in the company said over 32 per cent of the stake will be taken by Nippon Life Insurance while remaining around 10.76 per cent will be sold to financial investors.

Reliance Capital also said the entire proceeds of approximately Rs 6,000 crore will be utilised to reduce the outstanding debt by 33 per cent. On Thursday, shares of RNAM closed at Rs 233.75, up by 6.98 per cent on the BSE. The market capitalisation of the company, as on Thursday, stood at Rs 14,305.50 crore on the BSE.

Nippon had originally picked up a 26 per cent stake in the Indian asset management firm for Rs 1,450 crore in 2012, valuing it at Rs 5,600 crore then and later bought higher stake in the company.

Anil Ambani, chairman, Reliance Group, said: “I am delighted that our longstanding and most valued partner Nippon Life Insurance is increasing its stake in RNAM to 75 per cent. The monetisation of the RNAM stake is part of our value-unlocking strategy. We expect this transaction, together with other deals underway, to substantially reduce RCAP’s debt by over 50 per cent in the current financial year.” —FE

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