Reliance Capital said it will utilise the proceeds from the stake sale to reduce its outstanding debt
Reliance Capital, the financial services company of the Anil Ambani group, on Tuesday announced it raised $158 million from sale of 8 percent stake in Reliance Nippon Life Asset management Ltd (RNAM), its joint venture with Nippon Life Insurance of Japan.
The Anil Ambani group company offloaded the equity through the 'offer for sale’ (OFS) route, after it struck a deal last week with the Japanese insurance major Nippon Life Insurance to sell majority of its stake to the latter.
Arabian Business reported last month that Nippon Life Insurance Co was close to striking a deal with Reliance Capital to acquire the latter’s equity in their joint venture, RNAM, under the 'first right for refusal' clause.
As per the agreement with Reliance Capital, the Japanese firm will hike its shareholding in RNAM from 42.88 per cent to 75 per cent. This is to be done through a combination of buying shares from public shareholders of RNAM and Rel Cap.
The total valuation of the deal – Nippon Life Insurance’s stake acquisition and the OFS – is estimated to be about $860 million, Reliance Capital said in a regulatory filing on Tuesday.
Reliance Capital offloaded the stake through the OFS route to comply with the Indian regulatory requirement of achieving minimum public shareholding of 25 percent in listed companies.
Following its agreement with Reliance Capital, Nippon Life Insurance is now required to come out with an open offer to the minority shareholders of RNAM to acquire their shares in line with the Indian regulatory guidelines.
The minority or public shareholding in RNAM is estimated to be a little over 14 percent.
Depending on the shares tendered in the open offer, Nippon will acquire Reliance Capital’s stake to take its shareholding to 75 percent.
Reliance Capital said it will utilise the proceeds from the stake sale RNAM to reduce its outstanding debt.