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Last Updated : Aug 23, 2019 10:38 AM IST | Source: Moneycontrol.com

Reliance Capital jumps 6% on short-covering

The company is set to exit its mutual fund (MF) business after selling its stake in Reliance Nippon Life Asset Management to Nippon Life Insurance.

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Shares of Reliance Capital jumped almost 6 percent in early trade on August 23, mostly on account of short-covering.

The stock has been on a losing spree since August 19 and analysts say some short-covering might have given the stock a push.

"The stock jumped on short-covering as the fundamentals of the stock still look weak," said Sameer Kalra, Founder & President (Research) at Target Investing.

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Source: MyFNO

The company has been struggling to raise funds to meet its business requirements. The current liquidity crisis has made the condition worse.

Moreover, the company is set to exit its mutual fund (MF) business after selling its stake in Reliance Nippon Life Asset Management to Nippon Life Insurance.

With the closure of open offer, Nippon Life Insurance's stake in Reliance Nippon Life Asset Management (RNAM) has risen to 54 percent.

Nippon Life paid Rs 230 per share in the open offer, and the total pay-out was about Rs 1,500 crore. The company has now become the majority shareholder with 54 percent stake in RNAM.

As per the share purchase agreement, Reliance Capital will completely exit RNAM, and Nippon's shareholding in the asset management company will increase to 75 percent.

Around 1010 hours, shares of Reliance Capital traded at Rs 32.70 apiece, up by Rs 0.70 or 2.19 percent on BSE.

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First Published on Aug 23, 2019 10:38 am
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