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Facing a jail threat, Anil Ambani swung into action on Thursday to try and raise money to pay off his group companies’ debt.
While beleaguered telecom operator Reliance Communications (RCom) has asked its lenders to release about ₹260 crore lying in its account to pay off Swedish telecom equipment maker Ericsson, Reliance Capital has offered to sell out its 43 per cent stake in Reliance Nippon Life Asset Management Company (AMC) to joint venture partner Nippon Life Insurance Company.
RCom had received ₹260 crore from the Income-Tax Department as refunds, and the money has been lying in its bank account. The company wants to use this to pay off Ericsson following an ultimatum from the Supreme Court.
Jail term
On Wednesday, the Supreme Court held Ambani, Chairman of RCom, and two directors of the group guilty of contempt of court and asked them to pay ₹453 crore to Ericsson within four weeks. Failure to comply with the order will invite a three-month jail term. RCom had earlier deposited ₹118 crore with the Supreme Court Registry.
“RCom is confident of raising the balance about ₹200 crore for payment to Ericsson, in order to ensure that the entire ₹550 crore, plus interest thereon, stands paid to Ericsson well within the time of four weeks allowed by the Supreme Court,” RCom said in a statement.
According to sources, the Reliance Capital deal with Nippon Life of Japan is expected to fetch ₹7,000-8,000 crore and help the former reduce its ₹18,000-crore debt by about 40 per cent.
The change in ownership will also call for a 26 per cent open offer to retail investors by Nippon Life.
Reliance Nippon Life AMC was listed through an IPO at a price of ₹252 a share in November 2017. At the current market price of ₹187 a share, the 43 per cent is valued at ₹5,000 crore.
However, Reliance Capital will command a much higher premium to the current market price due to the exchange of control with the joint venture partner, said an analyst.
Mutual fund giant
Reliance Mutual Fund is the fifth largest in a crowded industry of 43 players. It has assets under management of ₹2.39 lakh crore as of January-end.
The deal would catapult Nippon Life to the largest among four foreign-owned mutual fund companies in India. With over $700 billion in assets, the Fortune-100 Nippon Life is the largest asset management company in Japan.
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