Reliance Capital has signed an agreement with Nippon Life Insurance for sale of its stake in Reliance Nippon Life Asset Management. The financial services holding company expects to receive Rs. 6,000 crores from the entire RNAM stake monetisation.
Reliance Capital Limited - the financial services arm of Anil Ambani-led Reliance Group - has decided to exit its stake in Reliance Nippon Life Asset Management (RNAM). According to the company’s press release, Reliance Capital has signed binding definitive agreements with Japan-based Nippon Life Insurance for the sale of its shareholding in RNAM. Presently, both the partners hold 42.88% each in the company, while the remaining is held by public shareholders.
Nippon Life is expected to make an open offer to the public shareholders of RNAM at Rs. 230 per share, as required under SEBI regulations, the press release has stated. The maximum permitted promoter shareholding is 75% for listed companies. The transaction price denotes a premium of 15.5% to the minimum 60-day price, as specified under the SEBI Takeover Regulations.
Reliance Capital is set to receive about Rs. 6,000 crores from the said transaction, which will include the sale of its stake to Nippon Life Insurance as well as the simultaneous Offer For Sale to other financial investors. The entire proceeds shall be utilized to bring down Reliance Capital’s outstanding debt by 33%.
Anil D. Ambani, Chairman of Reliance Group has been quoted in the press release as saying, “I am delighted that our longstanding and most valued partner, Nippon Life Insurance, is increasing its stake in RNAM to 75%. 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% in the current financial year.”
Investment banking firm, JM Financial, has acted as the advisor to Reliance Capital for the transaction.