Paving the way for stake sale in its commercial finance unit with a loan portfolio of about Rs 16,500 crore, Reliance Capital has got shareholders’ approval for the transfer of this business to a separate company. Post the transfer, Reliance Capital would be applying to the RBI for registering itself as a Core Investment Company (CIC) and this would also facilitate the application of a banking licence, as and when the apex bank’s policy permits.
The transfer was approved by an overwhelming majority of 99.99 per cent votes in favour of the scheme of arrangement at the court-convened general shareholders meeting held on September 10, Reliance Capital said in a statement on Monday. Reliance Nippon Life Insurance and Reliance Nippon Life Asset Management, both subsidiaries of Reliance Capital, already have a strategic partner – Nippon Life Insurance – with 49 per cent stake.
As per the scheme, commercial finance division of Reliance Capital was proposed to be merged into Reliance Gilts, a wholly-owned subsidiary of Reliance Capital, and this merged entity was to be renamed Reliance Commercial Finance (RCF). Reliance Gilts has now been renamed as Reliance Commercial Finance, which is among the leading SME lenders in Indian non-banking finance space with a focus on asset-backed lending and productive asset creation. The company has an aggregate loan portfolio of Rs 16,451 crore as of June 30.
“This transfer will align RCF with overall operating structure of Reliance Capital where all operating businesses are held in its wholly or majority owned subsidiaries.
“The proposal will enhance management focus and also provide flexibility to the company to unlock value through stake sale,” Reliance Capital Executive Director and Group CEO Sam Ghosh said in a statement. The transfer, which has been approved by the shareholders,
will be effective April 1, 2016, and will now be filed for requisite court and regulatory approvals.
The move will also enhance employee engagement and retention through ability to grant ESOPs in the business. Reliance Capital, a part of Reliance Group, is one of the leading financial services companies.