| Anil: Mix and match
Mumbai, Jan. 2: Anil Ambani's ADAE group has decided not to list Reliance Capital Ventures Ltd (RCVL), the holding entity for the financial services businesses that are being spun off from Reliance Industries as part of the carve-up plan for the Ambani empire.
Reliance Capital (RCL) ' the main underlying financial services business ' is already listed on the bourses and, therefore, listing of the holding company was thought to be unnecessary.
RCVL will be merged with Reliance Capital (RCL). Under the earlier plan, Reliance Industries shareholders were due to receive RCVL stock in a 1: 1 ratio. Later, 100 shares in RCVL were to be converted into five shares in Reliance Capital Ltd. Instead of the two-part process, RIL shareholders will now directly get five shares of RCL for every 100 shares.
The proposal to merge RCVL with Reliance Capital was cleared by the latter's board here today. The decision could mean that Reliance Energy Ventures Ltd (REVL), the holding company for the energy-related businesses, will also be similarly merged with Reliance Energy Ltd (REL), another listed entity. On Tuesday, the REL board is due to meet to decide on the merger of REVL with the company.
Under the demerger scheme in the Reliance empire, four entities will be demerged from RIL. These straddle telecommunications, coal-based energy, financial services and gas-based energy businesses. The four undertakings include Reliance Communications Venture Ltd, REVL, RCVL and Global Fuel Management Services. Shareholders of RIL will get shares in each of the four entities. With REVL also not likely to be listed, observers are looking forward to the listing of Reliance Communications and Global Fuel Management Services.
Late last month, the Anil Dhirubhai Ambani group had said that it would endeavour to list the shares of the four resulting by the the first quarter of the calendar year 2006.
Enumerating the reasons for not listing RCVL, RCL said in a press statement that the benefits of the amalgamation were many. To begin with, it would lead to direct shareholding of the company by 23 lakh Reliance shareholders, thereby enhancing their value.
Apart from eliminating dual listing of RCL and RCVL, it would also remove the possibility of a potential holding company discount through RCVL market price. Moreover, there would be increased liquidity for all the shareholders of RCL and wider domestic and international shareholder base for the company as well.
Pointing out that shareholders of RIL would receive five shares of RCL after the allotment of shares pursuant to the demerger of the petrochemical giant, RCL said that the share exchange ratio is based on the number of shares of the company held by RCVL and is as recommended by the leading international firm, KPMG.
According to RCL, the shares of the company held by RCVL will be cancelled under the scheme of amalgamation. The fully diluted equity capital of the company will remain at around Rs 245 crore, it added.
RCL said the amalgamation scheme is subject to the approvals of its shareholders and that of RCVL, the stock exchanges, the High Court of Gujarat, the High Court of Judicature at Mumbai.