Monday, 30th October 2017

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Reliance Capital exits mutual funds

RCap sells stake in RNAM to Nippon Life for Rs 4,522 crore

  • Published 24.05.19, 12:18 AM
  • Updated 24.05.19, 12:18 AM
  • a min read
In a statement, Anil Ambani's Reliance Capital said it has signed binding definitive agreements with Nippon Life Insurance to exit its stake in RNAM. Telegraph file picture

Anil Ambani’s Reliance Capital is exiting the mutual funds business. The holding firm is selling its stake in Reliance Nippon Life Asset Management Ltd (RNAM) to its joint venture partner Nippon Life Insurance of Japan.

Both partners hold a 42.88 per cent stake each in the fund house, while the rest is with public shareholders.

In a statement, Reliance Capital on Thursday said it has signed binding definitive agreements with Nippon Life Insurance to exit its stake in RNAM.

Nippon Life will also make an open offer to the 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.

Nippon Life Insurance will first acquire up to 19,66,05,000 shares from Reliance Capital for Rs 4,522 crore.

Reliance Capital will also come out with an offer for sale (OFS) for other financial investors. Together, it will mobilise Rs 6,000 crore, which will be used to bring down its debt by 33 per cent.

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

“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,” Reliance Group chairman Anil Ambani said.

Later in the day, Nippon Life Insurance made an open offer for acquisition of up to 8.99 crore shares of RNAM from public shareholders. The open offer is also at a price of Rs 230 per share aggregating to a total consideration of Rs 2,068.89 crore. The open offer has been made as the Japanese firm has entered into an agreement to acquire voting rights in excess of 5 per cent of the existing share capital in this financial year.

Pursuant to the share purchase and open offer, Nippon Life Insurance will be the largest shareholder in and exercise sole control over Reliance Nippon Life Asset Management, and Reliance Capital will cease to exercise control over the company.

In a separate filing, RNAM said that Anil Ambani’s son Jai Anmol Ambani has tendered his resignation as a director of the company, effective Thursday.