Reliance Cap to sell insurance arm stake

Plans i-banking foray, tweaks PE plan.

Reliance Capital is planning to unlock value by selling a part of its stake in its life insurance arm and foraying into investment banking, group Chairman Anil Ambani has told shareholders.

In addition, the Reliance Anil Dhirubhai Ambani Group (ADAG) has tweaked its private equity (PE) plans, which have been delayed by several months, to focus on domestic sources of funding.

“We are considering various options to unlock value in our life insurance business, from a potential IPO (initial public offer) to strategic or financial stake sale or a combination of both. A final decision will be taken shortly,” Ambani said at Reliance Capital’s annual general meeting here.

Company executives had earlier informally talked about a stake sale but this is the first formal statement of intent from the group. No time-frame was provided, though.

If the IPO goes through, Reliance Life Insurance, which is among a handful of private companies in the business to operate without a foreign partner, could be among the first set of life insurers to hit the capital market. Many others are planning public offers.

Reliance Life Insurance has grown rapidly over the last four years and has emerged as among the top four private life insurers in the country.

Ambani also announced that Reliance Capital was planning to enter the investment banking business in the next 12 months.

“Given the scale and magnitude of our relationships across corporate India and the size and reach of our distribution network, we are ideally positioned to create a significant presence in this business,” he said.

On the PE fund, he said the company planned to raise funds from domestic HNIs (high networth individuals). The group has been in talks to set up a PE fund for almost a year but has been unable to tie up funds due to the global financial crunch. Reliance Capital was originally looking to start with a $1 billion fund (around Rs 4,000 crore based on the exchange rate then) by March this year. Recent media reports have suggested that the financial services arm of ADAG has scaled this down to around Rs 3,000 crore.

Ambani said that the group’s PE investment arm would focus on growth capital, buyouts, minority investment and acquisition financing. “We will put money in sunrise and growth sectors alike,” Ambani said.