Reliance Capital has signed binding definitive agreements with Nippon Life Insurance of Japan to exit its stake in Reliance Nippon Life Asset Management, according to a statement from Reliance Capital to the exchanges.
Both partners currently hold 42.88 percent each in the company, while the rest is with public shareholders.
Pursuant to the agreements, 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 percent for listed companies, which means Nippon will hold 75 percent stake in the AMC.
The transaction price represents a premium of 15.5 percent to the minimum 60-day price as specified under the SEBI Takeover Regulations.
Reliance Capital will receive proceeds of approximately Rs 6,000 crore through sale of its shareholding to Nippon Life Insurance at Rs 230 a share, and the simultaneous Offer For Sale (OFS) to other financial investors.
This transaction will reduce Reliance Capital’s debt by 33 percent. The transaction is subject to necessary regulatory approvals
Anil D. Ambani, Chairman, Reliance Group, said, “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 percent in the current financial year.”
JM Financial Limited acted as the advisor to Reliance Capital for the above transaction.
Nippon Life Insurance had made an initial investment in RNAM in 2012. The company will continue to run its operations as is without any change in structure and management. Nippon Life Insurance, a 130-year-old company, is one of the largest life insurance companies in Japan, managing assets of over $700 billion, revenues of over $70 billion and core operating profit of $6.8 billion.
It has the largest market share in Japan among private life insurance companies. It employs over 70,000 employees and serves nearly 14 million customers worldwide. The company has been investing in asset management companies globally, and have they acquired 24.75 percent stake in TCW of US in December 2017 and 5 percent stake in DWS of Germany in March 2018. It has international operations across the US, Europe, Asia, and Australia region.
In March quarter, Reliance Nippon Asset Management reported 34 percent YoY rise in net profit at Rs 151 crore.