Reliance Capital Thursday said it will exit the mutual funds business by selling its stake in Reliance Nippon Life Asset Management Ltd (RNAM) to its joint venture partner Japan's Nippon Life Insurance.
Both partners hold 42.88 per cent each in the company, while the rest is with public shareholders.
Reliance Capital said it has signed binding definitive agreements with Nippon Life Insurance of Japan.
"Pursuant to the agreements, Nippon Life will also make an open offer to the public shareholders of RNAM at Rs 230 per share, as required under Sebi regulations, and reach the maximum permissible promoter shareholding of 75 per cent for listed companies," Reliance Capital said in a regulatory filing.
"The transaction price represents a premium of 15.5 per cent to the minimum 60-day price as specified under the Sebi Takeover Regulations," it added.
Reliance Capital said it will receive proceeds of about Rs 6,000 crore through sale of its shareholding to Nippon Life Insurance at Rs 230 a share, and the simultaneous offer-for-sale (OFS) to other financial investors.
"The entire proceeds of Rs 6,000 crore will be utilised to reduce Reliance Capital's outstanding debt by 33 per cent," it added.
Reliance Group Chairman Anil D Ambani said, "...our longstanding and most-valued partner, Nippon Life Insurance, is increasing its stake in RNAM to 75 per cent. The monetisation of the RNAM stake is part of our value unlocking strategy. We expect this transaction, together with other deals underway, to substantially reduce RCap's debt by over 50 per cent in the current financial year".
Later in the day, Nippon Life Insurance made an open offer for acquisition of up to 8.99 crore fully paid-up equity shares of a face value of Rs 10 each representing 14.63 per cent of the expanded voting share capital of Reliance Nippon Life Asset Management Ltd from the public shareholders.
Open offer is at a price of Rs 230 per offer share aggregating to a total consideration of Rs 2,068.89 crore.
In the public announcement of the open offer, Nippon Life said the acquirer is not obligated to acquire 8.66 per cent of the existing share capital currently pledged by the seller (Reliance Capital) to an existing lender.
Open offer has been made since Nippon Life Insurance has entered into the agreement to acquire voting rights in excess of five per cent of the existing share capital in this financial year.
Pursuant to completion of the acquisition of the shares and the open offer, Nippon Life Insurance will be the largest shareholder in and exercise sole control over Reliance Nippon Life Asset Management, and Reliance Capital will cease to exercise control over the company.
In a separate filing, Reliance Nippon Life Asset Management Ltd told Anil Ambani's son Jai Anmol Ambani has tendered his resignation as a director of the company, with effect from May 23, 2019.
Shares of Reliance Capital settled 2.77 per cent higher at Rs 131.90 apiece and shares of Reliance Nippon Life Asset Management settled 6.98 per cent higher at Rs 233.75 apiece on BSE.