Reliance Capital surges as Sumitomo Mitsui completes acquisition of 2.77% stake

The stock has rallied 11% to Rs 491 on BSE on back of an over two-fold jump in trading volumes.

Shares of Reliance Capital have moved higher by 11% to Rs 491, after the company allotted seven million equity shares at Rs 530 per share to Japan’s Sumitomo Mitsui Trust Bank on preferential basis.

“The board of directors of the company at its meeting held on March 12, 2015 have allotted 70,00,000 equity shares of Rs 10 each at a premium of Rs 520 per share to Sumitomo Mitsui Trust Bank Limited,” Reliance Capital said in a statement.

Sumitomo Mitsui Trust Bank has acquired an initial 2.77% strategic stake in Reliance Capital amounting to Rs 371 crore (US$ 58.4 million) through preferential allotment, with a lock-in period of one year. The investment has been made at Rs 530 per share representing a premium of over 11% to the stock price of relevant date of Reliance Capital, it added.

As part of the agreement, Reliance Capital intends to establish a new Bank in India, with support of Sumitomo Mitsui Trust Bank as strategic partner, as and when RBI’s policies permit formation of the same.

Both companies will also collaborate in providing solutions for their clients, including inter alia in the area of M&A (merger and acquisition) opportunities in India and Japan, and will assist each other in distribution of their respective financial products through their networks.

Reliance Capital will also support clients of Sumitomo Mitsui Trust Bank in their supply chain financing and advisory needs in India.

The stock opened at Rs 448 and touched high of Rs 493 on BSE.  The trading volumes on the counter more than doubled with a combined 9.88 million shares changed hands till 1525 hours on NSE and BSE.