Sells entire stake in Reliance Nippon

Anil Ambani-controlled Reliance Capital is all set to exit the mutual fund business by selling its entire stake in Reliance Nippon Life Asset Management Ltd.(RNAM) to its foreign partner Nippon Life Insurance.

“Reliance Capital Ltd. today [Thursday] announced it has signed binding definitive agreements with Nippon Life Insurance of Japan to exit its stake in Reliance Nippon Life Asset Management Ltd.,” said a statement by Reliance Capital.

Both Reliance Capital and Nippon Life currently hold 42.88% in the asset management company with the balance held by public shareholders. Reliance Capital will receive about ₹6,000 crore — at ₹230 per share — through the stake sale. The funds will be used to reduce Reliance Capital’s outstanding debt by 33%, the statement added.

“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,” the statement quoted Anil Ambani as saying.

Open offer in the offing

Nippon Life will also make an open offer to the public shareholders of the asset management company at ₹230 per share — the price represents a premium of 15.5% to the minimum 60-day price as specified under the Takeover Regulations of the Securities and Exchange Board of India (SEBI).

Nippon Life Insurance, a 130-year old company, is one of the largest life insurance companies in Japan, managing assets of over $700 billion with revenue of over $70 billion and core operating profit of $6.8 billion. It had made its initial investment in the mutual find entity in 2012.

RNAM CEO Sundeep Sikka will continue to lead the company, which will manage operations without any change in structure and management.

According to Value Research, a mutual fund tracking company, Reliance Mutual Fund had total assets under management of ₹2.25 lakh crore as on April 30.