Move comes amid steps by Anil Ambani Group to cut debt

Reliance Capital has invited Nippon Life to make an offer to acquire up to 42.88% held by Reliance Capital in Reliance Nippon Life Asset Management, the mutual fund (MF) business of the Anil Ambani Group.

According to a stock exchange statement, the Japanese major, which manages assets worth more than $700 billion globally, already holds 42.88% stake in the entity. About 14% of the stake is held by the public.

While it could not be independently ascertained if Nippon Life is currently interested in increasing its stake in the Indian fund house, an open offer would be triggered if the proposed transaction goes through.

Incidentally, if the transaction goes through, then the entity would also become the largest wholly foreign-owned mutual fund house in India.

The development comes amidst various attempts by Mr. Ambani to reduce the huge overall debt of his business group, which is facing cases at the Supreme Court and the National Company Law Tribunal (NCLT).

On Thursday, shares of Reliance Nippon Life Asset Management gained almost 20%, or ₹31.15, to close at ₹187.05. The total market capitalisation of the fund house is pegged at ₹11,447.46 crore.

While the sale of its 42.88% stake would net Reliance Capital about ₹5,000 crore at Thursday's closing price, the actual realisation could be higher if the acquirer paid a premium for getting control of the listed entity.

The mutual fund company, which got listed on the bourses in November 2017, is currently trading way below its issue price of ₹252.