Reliance Anil Dhirubhai Ambani group (ADAG) company Reliance Capital plans to sell stake in subsidiary Reliance Life Insurance through an initial public offering (IPO) or to strategic or financial investors.
There could even be “a combination of both”, subject to necessary approvals, ADAG Chairman Anil Ambani said at Reliance Capital’s annual general meeting on Tuesday.
Reliance’s life insurance business has over the past four years grown rapidly to emerge among the top four private life insurance players in the country. “We are now considering various options to unlock this value. A final decision in this matter will be taken shortly,” Ambani said.
Reliance Capital charted out two new businesses, institutional broking and private equity, in 2008-09. In the current fiscal year, the company plans to add “strength and muscle” to these ventures.
Another group firm, Reliance Infrastructure, which achieved financial closure for projects worth Rs 32,000 crore in a year, currently has cash or cash equivalents of nearly Rs 10,000 crore on its balance sheet, Ambani said.
During the year, the promoters subscribed to 42.9 million share warrants, convertible into equity, resulting in a further capital infusion of Rs 4,300 crore into Reliance Infrastructure. Post conversion, the promoter group’s holding will increase from 38 to 48 per cent.
“This will enhance the company’s net worth to over Rs 16,000 crore, and increase borrowing capability, even at a conservative debt-equity ratio of 2:1, to Rs 32,000 crore,” said Ambani. The group’s net worth stands at Rs 64,000 crore. Anil Ambani said the company had considerably strengthened its financial muscle to capture the huge emerging opportunities in infrastructure sector.