E-Paper
Reliance Capital starts monetisation process, invites EOI for key assets
The motetisation process was started as Reliance Capital invited Expression of Interest or EoI on Saturday and potential bidders have time till December 1 to submit an offer.
Reliance Capital has started a process to monetise its assets to unlock the value of its underlying businesses and targets with an aim to make RCap debt-free. This includes the entire stake in Reliance General Insurance Company Ltd and Reliance Securities Ltd and 51 per cent stake in Reliance Nippon Life Insurance Company Ltd. Reliance Capital’s secured debt is about ₹15,000 crore and the debenture holders represent 93% of the total debt of the company.
The process was started as the Anil Ambani company invited Expression of Interest or EoI on Saturday and potential bidders have time till December 1 to submit an offer. The monetisation process is being run under the Committee of Debenture Holders and the Debenture Trustee Vistra ITCL India Ltd, which represents 93 per cent of the total outstanding debt of Reliance Capital. SBI Capital Markets Limited and JM Financial Services Limited will run an independent and transparent asset monetisation process, reports have said.
Bidders can submit EoI for all or part of RCAP’s stake in key subsidiaries, including 100 per cent stake in Reliance General Insurance, which has investment book of ₹12,315 crore as on September 30, 2020, according to reports. Its gross direct premium income was at ₹4,501 crore during the first six months of FY21.
There is a sale of 51 per cent stake in Reliance Nippon Life Insurance, the 10th largest private sector insurer which has AUM of ₹21,912 crore, as well. Other assets on sale are 100% stake in Reliance Securities, a broking and distribution company; 100% stake in Reliance Financial; 49% stake in Reliance Asset Reconstruction, which manages a portfolio of ₹1,996 crore; 20% stake in Indian Commodity Exchange; 100% stake in Reliance Health Insurance. The company’s investments in Naffa Innovations Pvt Ltd and Paytm E-Commerce Pvt Ltd are also on offer.
Reliance Capital performed its best with a gross direct premium income of ₹4,501 crore during the first 6 months of FY20-21 amid the coronavirus pandemic. The company witnessed a sharp turnaround during FY19-20 with a profit after tax of ₹35 crore and 75% growth with 12% CAGR in embedded value over the last four years. It has a claim settlement ratio of 98.1%t in FY19-20 and a higher solvency ratio of 207%. Its assets under management (AUM) was ₹21,912 crore as of September 30, 2020, and an individual premium market share of 2.20 per cent amongst private insurers. It has a strong distribution network of 134 branches with amongst the largest agency force of 46,742 as of September 30, 2020, across the country.
(With agency inputs)
