Billionaire Anil Ambani’s Reliance Capital Ltd. is in talks to sell a stake in its fund management unit to Nippon Life Insurance Co. and may enter the banking business as it seeks to revive shareholder returns.
There will be “definitive news” on the talks to sell a stake in Reliance Capital Asset Management Ltd. soon, Ambani said at his company’s annual general meeting today. Proceeds of Nippon’s proposed investment in Reliance Asset will be used to reduce debt, Ambani said. Akira Tsuzuki, a spokesman for Nippon in Tokyo, declined to comment on the talks.
Ambani is planning to sell stakes in units including his mobile-phone tower business as he attempts to reduce net debt of over $15 billion in six Reliance companies, according to data compiled by Bloomberg. Reliance Capital, whose shares have plunged 40 percent this year, is considering new growth opportunities, including banking, in a market where credit growth is forecast at 18 percent for the year ending March.
“Banking is a new growth opportunity,” Ambani said at his company’s annual general meeting, according to a statement sent to stock exchanges. “We will evaluate opportunities to enter this high-growth sector.”
Companies including Larsen & Toubro Ltd. and Religare Enterprises Ltd. have expressed interest in acquiring bank licenses. The Reserve Bank of India last month proposed tougher capital rules and mandatory share sales within two years as conditions for issuing licenses for the first time in seven years.
“Reliance Bank” will tap the low penetration of financial products and services in India, Ambani said.
The company is looking forward to the release of the final guidelines for applying for banking licenses, Reliance Capital’s Chief Executive Officer Sam Ghosh said in a statement on Aug. 29 after the central bank published the draft rules.
Reliance Capital, which has over 20 million customers, rose 1.4 percent to 394.8 rupees at the 3:30 p.m. close in Mumbai.
Ambani said Reliance Capital shareholders had asked for free shares and a special dividend and the request would be placed before the company’s board for consideration.
Eton Park Capital Management LP, the hedge-fund firm founded by former Goldman Sachs Group Inc. partner Eric Mindich, paid 5.01 billion rupees ($102 million) in December 2007 for a 5 percent stake in Reliance Asset, valuing the company at 100 billion rupees.