Reliance Capital has commenced its asset monetization process to unlock value of its underlying businesses and targets to make RCAP debt-free.
SBI Capital Markets Limited and JM Financial Services Limited will run an independent and transparent asset monetization process, as per banking sources.
The process was launched on October 31, 2020 by inviting Expression of Interest (EOI) for it’s key assets.
The monetization 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.
The EOIs invited for all or part of RCL’s stake in the key subsidiaries and assets individually or in any combination thereof.
This includes 100 per cent stake in Reliance General Insurance Company Limited (RGI). The paid up capital of Reliance General Insurance is Rs. 252 crore as of September 30, 2020. It is the 4th largest private general insurance company with market share of 4.5 per cent as of March 2020 in the general insurance category.
There has been consistent growth in AUM year-on-year with investment book of Rs 12,315 crore as on September 30, 2020. The company performed its best even during COVID times with gross direct premium income of Rs 4,501 crore during the first 6 months of FY20-21.
It has a strong distribution network of 134 branches with amongst largest agency force of 46,742 as of September 30, 2020 across the country.
EoIs are also invited for 2. 51% stake in Reliance Nippon Life Insurance Company Limited (RNLI). The paid-up capital of Reliance Nippon Life Insurance 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.
The company 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 4 years.
The company has an 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% amongst private insurers.
EoIs are also invited for a 100 per cent stake in Reliance Securities Limited, a broking and distribution company offering services across asset classes including equities, commodities, derivatives, currency, mutual funds, bonds & corporate FDs.
The fourth component of asset monetization is a 100 per cent stake in Reliance Financial Limited – RBI registered NBFC, engaged in the business of financing, money lending, capital market linked financing activities.
The fifth is a 49 per cent stake in Reliance Asset Reconstruction Limited which manages a portfolio of Rs. 1,996 crore as on September 30, 2020. It has over 3.3 lakh customers across retail and SME segment, with dominant retail presence in South and West region.
The sixth asset monetization component is a 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.
The seventh item is a 100 per cent stake in Reliance Health Insurance Limited and lastly, 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.