Reliance Capital Ltd, the diversified financial services firm promoted by the Anil Ambani-led Reliance Group, has offered to offload its entire stake in its mutual fund business to joint venture partner Nippon Life Insurance Co. Ltd.
In a stock-exchange filing, Reliance Capital said that it has invited Japan’s Nippon to make an offer to acquire its stake in Reliance Nippon Life Asset Management Ltd.
Reliance Capital and Nippon Life Insurance each own 42.88% in Reliance Nippon Life Asset Management, which made its stock market debut two years ago.
The development comes a day after the country’s Supreme Court held Anil Ambani guilty of contempt of court after the Reliance Group’s telecom arm Reliance Communications failed to pay dues worth around Rs 550 crore ($78 million) to equipment maker Ericsson.
Reliance Communications had earlier this month turned to the bankruptcy courts for debt resolution and the Reliance Group has been trying to monetise assets to pare its debt.
Shares of Reliance Nippon surged 20% after the announcement on Thursday before closing the day at Rs 187.05 apiece on the BSE. Shares of Reliance Capital, too, rose 11% to end at Rs 161.20 apiece.
Reliance Nippon Life had raised Rs 1,542.24 crore ($238 million) via its IPO that was subscribed 81 times as it became the first asset management firm to go public.
Nippon had originally picked up a 26% stake in the Indian asset management firm for $290 million in 2012, valuing it at Rs 5,600 crore ($920 million) then. It bought 9% more in 2014 and an additional 14% the following year.
On Thursday, debt-laden Reliance Communications said it had requested urgent approval from its lenders to release around Rs 260 crore in the form of income tax refunds lying in its bank account. Anil Ambani, who is the chairman of Reliance Communications, risks a jail term if he fails to pay up within four weeks.
The company said that it has already deposited Rs 118 crore with the Supreme Court and was confident of raising the rest of the required money along with interest before the stipulated deadline.
A person close to the development told Reuters that Reliance Communications was also looking to sell its real estate assets in Chennai and Kolkata to raise the remaining funds. It is also likely to urge Reliance Jio, controlled by Anil's elder brother and Reliance Industries Ltd chairman Mukesh Ambani, to speed up payments owed for fibre assets acquired from Reliance Communications.
Reliance Communications said in August that it had struck a deal to sell Jio its optical fibre and ancillary telecom assets for Rs 5,000 crore.
A month later, the cash-strapped Reliance Communications said it will be completely exiting the telecom business to concentrate on real estate in future.
The other Reliance Group companies include Reliance Infrastructure, Reliance Power, Reliance Naval and Engineering, and Reliance Home Finance.
Two weeks ago, Reliance General Insurance Company Ltd had re-filed draft documents for an initial public offering, less than three months after regulatory approval for its previous proposal lapsed.,