Reliance Nippon OFS oversubscribed, debt-ridden RCap divests entire stake

Rcap is aiming to raise up to Rs 6,000 crore by divesting its entire stake in Reliance MF, in order to pare debt

Reliance Capital (Rcap) has been successfully able to divest its 8.65 per cent stake in Reliance Nippon Life Asset Management—popularly known as Reliance Mutual Fund (MF). On Friday, an offer for sale (OFS) by Rcap in Reliance MF garnered 1.6 times more demand the shares on offer. The 52.9-million share offering saw bids for 82.5 million shares from institutional investors, data provide by stock exchanges showed. Another 5.3 million shares meant for retail investors will be auctioned on Monday.

The share sale is part of an agreement between Rcap and Japan’s Nippon Life, under which the former will sell its entire shareholding in Reliance MF.

The base price for the OFS was set at Rs 218 per share, 6.4 per cent discount to Reliance MF’s Thursday closing price. Shares of Reliance MF fell three per cent on Friday to end at Rs 227, while those of Rcap rose 3.6 per cent to Rs 137. Most bids in the OFS came at Rs 221.45, data provided by stock exchanges showed. Through the share sale, Rcap will be able to mop up Rs 1,173 crore. Following the OFS, the Anil Ambani group company’s stake in Reliance MF will fall from 42.88 per cent to 34.23 per cent.

Meanwhile, Japan’s Nippon Life has launched an open offer to acquire 14.6 per cent public shareholding of Reliance MF. Nippon Life currently holds 42.88 per cent stake in the asset manager. The Japanese firm has announced that it plans to hike its stake to 75 per cent. Depending upon how much shares it is able to garner through the open offer, it will buy the remaining from Rcap, as part of an agreement inked between the two joint venture partners on Thursday. Following the transaction, if Rcap is left with any stake in Reliance MF, it will be sold in the open market.

Rcap is aiming to raise up to Rs 6,000 crore by divesting its entire stake in Reliance MF. The sale proceeds will be used to cut debt.