Reliance Capital has signed a binding definitive agreement with Nippon Life Insurance of Japan to exit its stake in Reliance Nippon Life Asset Management Ltd (RNAM). Both partners currently hold 42.88 per cent each in the company, while the rest is with public shareholders. This markets RCap’s exit from the mutual funds business.
The sale of its stake will fetch Reliance Capital nearly Rs 6000 crore at Rs 230 a share.
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% for listed companies. The transaction price represents a premium of 15.5% to the minimum 60-day price as specified under the SEBI Takeover Regulations.
The entire proceeds of approx. Rs. 6,000 crore (US $ 860 million) will be utilised to reduce Reliance Capital’s outstanding debt by 33%.
“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,” Anil D. Ambani, Chairman, Reliance Group, said in a statement.
JM Financial Limited acted as the advisor to Reliance Capital for the above transaction.
Earlier this month, Reliance Nippon said in a BSE filing that Reliance Nippon is valued at over Rs 5,000 crore and sale of controlling stake is expected to be at a significant premium to market.