Reliance Capital (RCAP) debenture holders at their meeting held on January 5, passed the resolution with overwhelming majority for monetisation of its assets. This comes on the back of shareholders having already approved RCAP monetisation.
Reliance Capital had commenced its asset monetisation process - to unlock value of its underlying businesses which targets to make RCAP debt free.
JM Financial Services Limited and SBI Capital Markets Limited ran an independent and transparent asset monetizsation process.
Expression of interest for nine key assets was launched on October 31, 2020.
EOI process received massive response for the nine key assets as multiple players have placed interest for each asset with some of them also expressing interest in all the assets.
EOI applicants would now perform due diligence on each asset and submit binding bids for the nine key assets.
Asset monetisation process is being run under the aegis of Committee of Debenture Holders and the Debenture Trustee Vistra ITCL India Ltd, which represents 93 per cent of total outstanding debt of Reliance Capital.
EOIs invited for all or part of RCL's stake in the following key subsidiaries and assets individually or in any combination thereof:
1. 100 per cent stake in Reliance General Insurance Company Limited (RGI).
Paid up capital of Reliance General Insurance is Rs 252 crore as of September 30, 2020. It is the fifth largest Private General Insurance Company with a market share of 4.5 per cent as of March 20 in the Private General Insurance category. Consistent growth in AUM Year-on-Year with investment book of Rs 12,315 crore as on September 30, 2020. Performed its best even during Covid times with Gross Direct Premium Income of Rs 4,501 crore during the first six months of FY20-21. Strong distribution network of 134 branches with amongst one of the largest agency force of 46,742 as of September 30, 2020 across the country.
2. 51 per cent stake in Reliance Nippon Life Insurance Company Limited (RNLI).
Paid up capital of Reliance Nippon LifeInsurance is Rs 1,196 crore as of September 30, 2020. RNLI is a joint Venture with Japan's largest life insurer - Nippon Life which holds 49 per cent shareholding. It is the 10th largest Private Sector Insurer (in terms of Individual WRP) and amongst largest Non-Banca company with a network of 717 offices. Witnessed sharp turnaround in performance during FY19-20 with a profit after tax of Rs 35 crore and ~75 per cent growth (12 per cent CAGR) in Embedded Value over last four years.
Impressive claim settlement ratio of 98.1 per cent in FY19-20 and a higher Solvency ratio of 207 per cent (as against regulatory requirement of 150 per cent).
As on September 30, 2020, the AUM was Rs 21,912 crore. and an Individual Premium Market Share of 2.20 per cent amongst private insurers.
3. 100 per cent stake in Reliance Securities Limited - Broking and distribution company offering services across asset classes including equities, commodities, derivatives, currency, mutual funds, bonds and corporate FDs.
4. 100 per cent stake in Reliance Financial Limited - RBI registered NBFC, engaged in the business of financing, money lending, capital market linked financing activities.
5. 49% stake in Reliance Asset Reconstruction Limited:
• Manages portfolio of Rs. 1,996 crore as on September 30, 2020. Over 3.3 lakh customers across retail and SME segment, with dominant retail presence in South and West region.
6. 20 per cent stake in Indian Commodity Exchange. Other key shareholders in ICEX are Central Warehousing Corporation, MMTC Limited, Indiabulls Housing Finance Limited, Indian Potash Limited and Bajaj Holdings and Investments. ICEX is a SEBI regulated commodity derivatives exchange.
7. 100 per cent stake in Reliance Health Insurance Limited.
8. Other PE investments like Naffa Innovations Private Limited, Paytm E-Commerce Private Limited.
RCL's key businesses and subsidiaries are performing well and business will continue as usual. The management, professional team, customer and partners will be unaffected by the proposed asset monetisation programme of RCAP.
Resolution of Lending businesses of RCAP - Reliance Home Finance and Reliance Commercial Finance. Reliance Home Finance (RHF) and Reliance Commercial Finance (RCF) are undergoing resolution under RBI circular dated June 7, 2019.
Bank of Baroda is the lead banker under the ICA resolution process of both the lending entities. The transactions for both RCF and RHF are expected to be closed by March 31, 2021.
