Written by: Kriti Anand
Reliance Capital Ltd, the financial services business of the Anil Dhirubhai Ambani Group (ADAG), has said that it will exit the mutual funds Business. Reliance announced that it will be selling its entire stakes to its foreign partner, Nippon Life Insurance.
“Reliance Capital Ltd today (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 Ltd,” said a statement by Reliance Capital.
Reliance Capital owns 42.88% stake, which it will sell to Nippon Life Insurance of Japan and other financial investors in the joint venture. The company will be receiving around Rs 6,000 crore at Rs 230 per share, through the stake sale. Reliance will use the entire amount to reduce its outstanding debt by 33%.
The public shareholders of Reliance Nippon Asset Management (RNAM) will be made an equal offer at Rs 230 per share by Nippon Life, as required under Sebi regulations. Nippon Life will reach the maximum permissible promoter shareholding of 75 per cent for listed companies.
After the news of the stake sale, which came out on Thursday, the shares of Reliance Nippon AMC surged 7.93 per cent to Rs 235 on Friday.
Reliance Capital Ltd had JM Financial Ltd act as the adviser for the transaction. It was in 2012 that Nippon Life Insurance made an initial investment in RNAM. After the sale, the company will continue to run its operations as is without any change in structure or management. Nippon Life Insurance is one of the largest life insurance companies in Japan. It is a 130-year-old company, managing assets of over $700 billion, revenues of over $70 billion and core operating profit of $6.8 billion.
“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 Reliance Capital’s debt by over 50% in the current financial year,” said Anil Ambani, chairman, Reliance Group.
