Reliance Cap turns its commercial finance division into a subsidiary

Reliance Capital on Monday said its shareholders had approved the transfer of its commercial finance division into a separate subsidiary "to provide flexibility to unlock value through stake sale".

The meeting was held on September 10 where almost all shareholders voted in favour of making one of the largest small and medium enterprises lenders into a separate subsidiary. As of June 30, Reliance Commercial Finance had total assets under management of Rs 16,451 crore.

Reliance Capital may seek strategic partners for the business instead of outrightly hiving off the subsidiary. Reliance already has two such subsidiaries - Reliance Nippon Life Insurance and Reliance Nippon Life Asset Management, where Reliance Capital tied up with Nippon Life Insurance.

"The transfer will also enhance employee engagement and retention through ability to grant ESOPs in the business," the company said. According to the plan, the commercial finance division of Reliance Capital was proposed to be merged into Reliance Gilts, a wholly owned subsidiary of Reliance Capital, and this merged entity was to be renamed Reliance Commercial Finance.

The transfer, effective April 1, would now be filed for requisite court and regulatory approvals, the company said.