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Reliance Capital surges on debt reduction plans

Reliance Capital surges on debt reduction plans

Reliance Capital surges on debt reduction plans
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By Pranati Deva  May 28, 2019 1:09:19 PM IST (Published)

Shares of Reliance Capital rose nearly 8 percent on debt reduction plans. The company is planning to divest its entire stake in Reliance Broadcast Network Limited (RBNL) to Jagran Prakashan-owned Music Broadcast Ltd (MBL). The sale will reduce Reliance Capital's debt by Rs 1,200 crore.

Shares of Reliance Capital rose nearly 8 percent on debt reduction plans. The company is planning to divest its entire stake in Reliance Broadcast Network Limited (RBNL) to Jagran Prakashan-owned Music Broadcast Ltd (MBL). The sale will reduce Reliance Capital's debt by Rs 1,200 crore.

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Recently, Reliance Capital also signed an agreement with Nippon Life to sell its stake in Reliance Mutual Fund for around Rs 6,000 crore. Reliance Capital has also exercised the "greenshoe" option and will sell over 8 percent of its shareholding in Reliance Nippon Asset Management through this OFS aggregating around Rs 1,100 crore.
A greenshoe option is an over-allotment option. In the context of an initial public offering (IPO), it is a provision in an underwriting agreement that grants the underwriter the right to sell investors more shares than initially planned by the issuer if the demand for a security issue proves higher than expected.
The stock rose as much as 7.7 percent to Rs 144 per share on BSE. At 2:14 pm, the stock was trading 6.3 percent higher at Rs 142 as compared to a 0.14 percent (57 points) fall in BSE Sensex at 39,626.
Other Anil Dhirubhai Ambani Group (ADAG) stocks also gained on positive sentiment. Reliance Power gained over 10 percent while Reliance Infra and Reliance Home Finance were up over 4 percent each.
MBL will initially acquire a 24 percent equity stake of RBNL by way of a preferential allotment for a total consideration of Rs 202 crore and thereafter subject to the receipt of all regulatory approvals, MBL will acquire the remaining equity stake at a total enterprise value of Rs 1,050 crore.
In addition, Reliance Capital will receive an estimated Rs 150 crore from the disposal of other assets of RBNL which do not form part of the transaction with MBL, in accordance with the regulations.
“We are delighted to announce the asset monetisation transaction with MBL, a leading FM Radio broadcaster. Together with the recently announced stake sale in Reliance Nippon Asset Management for Rs 6,000 crore and other ongoing monetisation plans, we expect Reliance Capital’s debt to reduce by approximately Rs. 12,000 crore (nearly 70 percent) in the current financial year," Amit Bapna, CFO, Reliance Capital said.
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