Reliance Capital Ltd. today announced it has signed binding agreement with Nippon Life Insurance of Japan to exit its stake in Reliance Nippon Life Asset Management Ltd (RNAM). Reliance Capital currently holds 42.88% stake in RNAM. Reliance Capital will sell the stake to Nippon Life Insurance of Japan, and a few other financial investors.
The entire stake sale is expected to realize ₹6000 crore (US $ 860 million) which will be used to pare down Reliance Capital's debt.
Nippon Life will also make an open offer to the public shareholders of RNAM at Rs. 230 per share, as required under SEBI regulations. The firm will 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 deal is said to be the largest FDI deal in the financial sector. The 129-year-old Nippon Life Insurance is also said to be operating outside Japan without a partner for the first time. The existing management of the company will continue led by Sundeep Sikka, executive director and CEO, Reliance Nippon Life Asset Management Company. RNAM will continue to remain a public limited company post the open offer.
In a statement released to the media, Anil D. Ambani, Chairman, Reliance Group, said, “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."
Shares of Reliance Nippon AMC surged 7.93% to ₹235 today on news of the stake sale.