Anil Ambani-controlled Reliance Capital Ltd has decided to transfer its commercial finance division into a separate company to unlock the value through stake sale, according to a press statement.
As per the scheme, the commercial finance division of Reliance Capital would be merged into Reliance Gilts, a wholly owned subsidiary of Reliance Capital, and this merged entity would be renamed Reliance Commercial Finance (RCF).
The proposal was approved by the board of Reliance Capital on Thursday.
Once the transfer is completed, Reliance Capital would be applying to the RBI for registering itself as a Core Investment Company (CIC). Besides, this would also facilitate the application of banking licence, as and when the apex bank’s policy permits, it said in a statement.
Reliance Life Insurance and Reliance Asset Management, both subsidiaries of Reliance Capital, already have a strategic partner Nippon Life Insurance, with 49 per cent equity stake.
“RCF has over 900 employees and the proposal will enhance employee engagement and retention through ability to grant ESOPs (employee stock ownership plans) in the business,” Reliance Capital Group CEO Sam Ghosh said.
The demerger will be soon filed for requisite clearance and would be effective from April 1, subject to necessary regulatory approvals.
Reliance Capital provides services around finance and investment, asset management, general insurance, broking businesses, consumer finance and asset reconstruction.