Nippon Life to buy 43% stake in Reliance MF for 70 billion yen: Nikkei

RCap, a part of Anil Dhirubhai Ambani Group, has been looking to monetise its assets to address its debt-related problems

The Japan-headquartered Nippon Life will pay about ¥70 billion (Rs 4,484 crore) to acquire a majority of its joint venture (JV) partner Reliance Capital’s (RCap) 43 per cent stake in Reliance Nippon Life Asset Management (RNAM), according to a Nikkei report. 

While the report doesn’t state the exact quantum of stake that Nippon Life could pick up, it says the firm “plans to look for a different Indian partner to take Reliance group’s place”.

The asset manager — in which Anil Ambani group’s RCap is an equal JV partner — saw its stock price rise as much as 6 per cent in intra-day trade on Friday. 

The shares closed 2.3 per cent higher. Meanwhile, the RCap stock rose up to 8 per cent before closing 2 per cent higher. Shares of Reliance Home Finance — the other listed entity of Rcap — closed 5.2 per cent higher at Rs 18.2 apiece, after rising 15 per cent. 

A company spokesperson added that Rs 650 crore of non-convertible debentures due on Friday were repaid in full by RCap. This could have also been an additional trigger for the surge in stock prices. Following the deal between RCap and Nippon Life, the latter’s 43 per cent stake will increase to above 70 per cent, the Nikkei report said.

The reported ¥70-billion valuation amounted to Rs 4,484 crore at current exchange rates. At close of trade on Friday, RCap’s 43 per cent stake was valued at Rs 5,307 crore.

chart

Expecting the deal to result in a change of control, analysts saw the deal getting finalised at a premium to market prices. The deal could also trigger an open offer if it leads to change of ownership.

RCap has been looking to monetise its assets to address debt-related challenges.

The RNAM stake sale is seen as a key part of RCap’s monetisation plans. 

During an interaction with Business Standard, the management of RCap had said that it was expecting to get Rs 10,000 crore or upwards from the stake sale in the asset management company, as well as from the monetisation of its general insurance business and other non-core businesses.

RNAM was listed in November 2017. The scrip closed at Rs 201 on Friday, which was 20 per cent lower than its issue price of Rs 252.