NEW DELHI, Feb 25: Reliance Capital today said it will transfer its commercial finance division into a separate company to unlock the value through stake sale.
Post the transfer, Reliance Capital would be applying to the RBI for registering itself as a Core Investment Company (CIC) and this move would also facilitate the application of banking licence, as and when the apex bank’s policy permits, it said in a statement.
As per the scheme, the commercial finance division of Reliance Capital would be merged into Reliance Gilts, a wholly owned subsidiary of Reliance Capital, and this merged entity would be renamed Reliance Commercial Finance.
The proposal to transfer Reliance Commercial Finance (RCF) was approved by the board of Reliance Capital today.
As per the scheme, the commercial finance division of Reliance Capital would be merged into Reliance Gilts, a wholly owned subsidiary of Reliance Capital, and this merged entity would be renamed Reliance Commercial Finance.
RCF is amongst the leading small and medium enterprise lenders in the non-banking finance space with a focus on asset backed lending and productive asset creation. The company has an aggregate loan portfolio of Rs 15,049 crore at the end of December.
The proposal will enhance management focus on Reliance Commercial Finance and also provide flexibility to the company to unlock value through stake sale.
“All operating businesses of Reliance Capital, except the commercial finance business, are held in its wholly or majority-owned subsidiaries,” Reliance Capital Group CEO Sam Ghosh said in a statement.
“Accordingly, to align the overall operating structure, it is proposed to transfer the Commercial Finance division of the company into a wholly owned subsidiary. This will also facilitate the treatment of the company as a CIC in terms of applicable RBI regulations,” he added.
Reliance Life Insurance and Reliance Asset Management, both subsidiaries of Reliance Capital, already have a strategic partner – Nippon Life Insurance – with 49 per cent stake.
“RCF has over 900 employees and the proposal will enhance employee engagement and retention through ability to grant ESOPs (employee stock ownership plans) in the business,” Ghosh added.
The demerger will be soon filed for requisite clearance and would be effective from April 1, subject to necessary regulatory approvals.
Reliance Capital, a part of Reliance Group, is one of the leading financial services companies. (PTI)
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