NSE Symbol: RELCAPITAL | BSE Code: 500111
Reliance Capital Ltd, a division of the Reliance Anil Dhirubhai Ambani Group, is one of India's leading private sector financial services companies. Reliance Capital is primarily a holding company, holding investments in its subsidiaries, associates and other group companies. Reliance Capital deals in asset management,mutual funds, stockbroking, wealth management services, life and general insurance, commercial and home finance, distribution of financial products, proprietary investments asset reconstruction and other activities in financial services.
Reliance Capital Ltd: History and Trends
Reliance Capital Ltd was consolidated in 1986 at Ahmedabad in Gujarat and it was named as Reliance Capital & Finance Trust Ltd. The company infiltrated the capital market with the first issue in 1990. Originally, the company engaged in uniform annuity yielding businesses such as leasing, inter-corporate deposits and bill discounting. In 1993, the company broadened its business to the fields of portfolio investment, lending against securities, project finance advisory services, custodial services, money market operations and investment banking. On January 5, 1995, the company changed its name to Reliance Capital Ltd. In December 1998, it also registered as a Non-banking Finance Company (NBFC).
In the year 2001-02, the company took a new strategic action by entering into life insurance and general insurance business sector. It made investments in the Reliance General Insurance Company Ltd and Reliance Life Insurance Company Ltd, since both the companies also became the two subsidiaries of the company. Also, they divested their shares in Observer Network Pvt Ltd and Reliance Net Ltd and both the companies ceased to be the subsidiaries of the company. The company shifted its registered office to Jamnagar, situated in Gujarat.
In the year 2005-06, Reliance Asset Management Pvt Ltd (Singapore) and Reliance Asset Management (Mauritius) Ltd became subsidiaries of Reliance Capital. The company along with its subsidiary Reliance Land Pvt Ltd procured the governing stake in Adlabs Films Ltd, which is a leading company involved in the entertainment sector. after the acquisition, the company and Reliance Land Pvt Ltd became the promoters of Adlabs Films Ltd. In the same year, the company acquired AMP Sanmar Life Insurance Company Limited, with the consent of Insurance Regulatory and Development Authority (IRDA), that enabled the company to infiltrate the sector experiencing exciting growth prospects, i.e., insurance. After the acquisition was concluded, AMP Sanmar Life Insurance was renamed to Reliance Life Insurance Company Ltd. the Insurance company moved their registered office to Mumbai, India.
In 2006-07, Reliance Venture Asset Management Pvt Ltd, Travelmate Services (India) Pvt Ltd, Medybiz Pvt Ltd, Net Logistics Pvt Ltd, Reliance Capital Research Pvt Ltd and Reliance Technology Ventures Pvt Ltd became subsidiaries of the Reliance Insurance company. According to the scheme of this merger, Reliance Capital Ventures Ltd was merged with the company. Reliance Mutual Fund launched six new schemes and they raised the number of branches from 81 to 123. In the Reliance Life Insurance, the distribution channels were increased to 217 branches against 153 branches. Also, Reliance Life Insurance Company Ltd obtained the approval of the Insurance Regulatory & Development Authority (IRDA) to begin another 130 branches. Reliance Asset Management Pvt Ltd (Singapore), a fully owned subsidiary of the company gained a green-signal from the Securities and Exchange Board of India and the Monetary Authority of Singapore to initiate operations.
In February 2007, the first-ever fund of this subsidiary, known as India Equity Growth Fund, began its operations. In April 2007, the company officially launched Reliance Money, which is online financial services and solutions portal, that allows the customers with investment and trading in equities, equity options, offshore investments, commodities futures,life and general insurance products, mutual funds, IPOs, and credit cards. The array of offerings, the ease of access and the absolute technological edge which Reliance Money brings is exceptional for Indian financial and capital markets.
In the year 2007-08, Reliance Asset Management (UK) and Reliance Capital Markets Pvt. Ltd. Plc became subsidiaries of the company. Reliance Mutual Fund started six innovative schemes like Reliance Wealth + Health Plan (unit linked plan) , Reliance Secure Child Plan (unit linked plan), Reliance Auto Invest Plan, and Reliance Total Investment Plan Series (Retirement and unit-linked insurance plan) and Group Leave Encashment Plan. Reliance Money made a tie-up with global partners like Vasco, Valcambi, Reuters, Webaroo, Wincor Nixdorf and World Gold Council to provide the customers with better and wider access to global products. In May 2007, Reliance Consumer Finance started its operations. Thus, the company began the fast-expanding consumer-finance segment with an extensive range of products which covers personal loans, vehicle loans, loan against property, home loans and SME loans. In November 2007, the Global fund management house, Eton Park acquired 4.76% equity stake in the Asset Management Company.
In January 2008, Reliance Capital started a new fund - Reliance Natural Resources Fund. In February 2008, the company received consent from Reserve Bank of India to initiate the asset reconstruction business.
In 2008-09, Reliance Consultants (Mauritius) Ltd, Reliance Home Finance Pvt Ltd, Reliance Capital Services Pvt Ltd, Reliance Equities International Pvt Ltd, Reliance Consumer Finance Pvt Ltd, Reliance Capital (Singapore) Pte Ltd, Reliance Prime International Ltd, Reliance Commodities Ltd, Reliance Securities Ltd, Reliance Alternative Investments Services Pvt Ltd, Reliance Financial Ltd, and Reliance Capital Pension Fund Ltd became the subsidiaries of the company.
In January 2009, Reliance ARC procured 2 NPAs from Dena Bank for a total procurement price of over 2 crores. During the year, Reliance Capital Asset Management gained approval from the Malaysian Authorities to begin operations in Malaysia. Additionally, RCAM received approval from the Financial Services Authority in the UK to commence investment advisory operations in the country. Reliance Life Insurance launched 89 life insurance policies
In the year 2009-10, Reliance Asset Management (Malaysia) became a subsidiary of the company. Reliance Mutual Fund drove a new product feature - Reliance Smart Step. Reliance Life Insurance started five new life insurance policies, namely Reliance Traditional Group Gratuity Plan, Reliance Jan Samriddhi Plan, Reliance Life Highest NAV Guarantee Plan, Reliance Traditional Super Invest Assure Plan and the Reliance Senior Citizen term Plan. In May 2009, the Reliance Mutual Fund launched a new fund known as the Reliance Infrastructure Fund. Reliance Spot Exchange was an initiative of the company in the exchange space by initiating modern exchanges in various segments. They began operations by launching the Reliance Spot Exchange (RSX) in October 2009.
In June 2010, the company shifted their Consumer Finance Division (CFD) business to two of its wholly-owned subsidiaries; Reliance Home Finance Pvt Ltd (RHFPL) and Reliance Consumer Finance Pvt Ltd (RCFPL).
In the financial year 2010-11, these companies became the subsidiaries of Reliance Capital Ltd
Reliance Exchangenext Ltd,
Reliance Spot Exchange Infrastructure Ltd,
Quant Capital Pvt Ltd,
Quant Broking Pvt Ltd,
Quant Securities Pvt Ltd,
Quant Commodities Pvt Ltd,
Quant Commodity Broking Pvt Ltd,
Quant Capital Advisors Pvt Ltd,
Quant Capital Finance and Investments Pvt Ltd,
Reliance Wealth Management Ltd,
Quant Investment Services Pvt Ltd,
Qoppa Trading Pvt Ltd
Valankulam Investments & Trading Pvt Ltd.
However, Medybiz Pvt Ltd, Net Logistics Pvt Ltd and Reliance Capital Services Pvt Ltd ceased to be the subsidiaries of reliance capital ltd. in the same year, Reliance Commercial Finance Pvt Ltd (RCFPL), a completely owned subsidiary of the company, was merged with the company. In June 2010, the brokerage and other financial services business of Reliance Equities International Pvt Ltd was de-merged into Quant Broking Pvt Ltd.
In February 2011, the infrastructure division of Reliance Money Infrastructure Pvt Ltd was de-merged into Reliance Capital Asset Management Company Ltd. In October 2011, the company executed the sale of a 26% stake in Reliance Life Insurance to Nippon Life Insurance Company for compensation of 3062 crores.
In February 2012, the Company, through their entirely owned subsidiary, Sun International (South Africa) Ltd, procured additional interest in Real Africa Holdings Ltd, consequently increasing their holding to 99%. In March 2012, the world's largest insurance company, Nippon Life Insurance Company, signed conclusive agreement with the company to obtain 26% stake in Reliance Capital Asset Management (RCAM), which is India's profitable Asset Management Company (AMC).
On 17 August 2012, Reliance Capital announced the completion of the transaction for sale of a 26% stake in Reliance Capital Asset Management or RCAM to Nippon Life Insurance.
In February 2013, Reliance Capital Asset Management based in Singapore (RCAMS), which is also a subsidiary of Reliance Capital Asset Management (RCAM) India, stated that the company had crossed 1 billion USD AUM milestones in its offshore funds.
In June 2013, Reliance Capital announced significant decisions to support the Government's objective of restricting gold imports. Reliance Capital also announced that it has decided to discontinue the sale of gold in physical form (including the supply of gold coins for sale through India Post), and also as an investment product, transversely across all its businesses and subsidiaries. Also, Reliance Capitals Commercial Finance Division had voted to suspend financing against gold as a security. Moreover, Reliance Capital Asset Management (RCAM), a part of Reliance Capital, has also decided to suspend any new subscriptions in the Reliance Gold Savings Fund. however, existing SIP investors won't be harmed by this decision.
In March 2015, Sumitomo Mitsui Trust Bank, Limited of Japan built an acquisition of 2.77% strategic stake in Reliance Capital. Sumitomo Mitsui Trust Bank, a Japanese MNC, has acquired an initial 2.77% strategic stake in Reliance Capital which amounts to 371 crores (58.4 million USD) through special allotment, which has a lock-in period of one year. This investment was made at Rs 530 per share. As a part of the agreement, Reliance Capital aims to establish a new bank in India, with support from the Japanese multinational banking and financial services provider, Sumitomo Mitsui Trust Bank as a strategic partner, if the central bank allows the company to form the bank. Both companies also plan on collaborating in providing financial and banking solutions for their clients, in the field of M&A openings in India and Japan, and will support each other in the distribution of each other's financial products through the network that they have built in their own countries. Sumitomo Mitsui is the fourth largest bank in Japan in terms of financial operations and Japan has the largest financial institution managing assets in the world adding up to 682 billion USD worth assets under custody of USD 1.8 trillion.
In June 2015, Gujarat International Finance Tec-City (GIFT), which is a project of Government of Gujarat, proclaimed the allotment of 5 lakh sq ft of area to Anil Ambani led Reliance Capital Limited (RCL). The company was granted this space in the International Finance Service Centre (IFSC) Special Economic Zone, after being set up under the GIFT project. This is the largest space taken by any private company in IFSC under GIFT project till date.
In August 2015, Reliance MediaWorks Ltd. (RMW) announced the conclusion of the transaction for selling off its multiplex business to Carnival Cinemas Ltd., in the largest-ever deal in this sector in India. The sales proceeds will be used by the company to subdue the Reliance Capitals leverage by approximately 700 crores, through a combination of transference of debt of RMW and infusion of the cash proceeds received in the company. The transaction is a furtherance of the formulated objectives of Reliance Capitals which focuses purely on its core financial services businesses, significantly lessening the exposure to non-core investments in media and entertainment sector, and decreasing overall debt.
In October 2015, RCAM, which is a part of Anil Ambani led Reliance Capital, signed a series of definitive agreements to procure Goldman Sachs Asset Management (GSAM) onshore enterprise in India. Reliance Capital Asset Management paid a total sum of 243 crores ( 37.5 million USD) to acquire all the onshore mutual fund schemes of GSAM, including exchange-traded funds, of GSAM India.
Nippon Life Insurance (NLI), which is a Fortune 500 company and one of the greatest life insurers in the world, now became a co-sponsor of Reliance Mutual Fund, accompanying Reliance Capital, and it will own 49% staked in Reliance Capital Asset Management. In line with the new shareholding, the Reliance Capital Asset Management was renamed to Reliance Nippon Life Asset Management.
On 30 March 2016, Reliance Capital declared the completion of an additional 23 % stake sale of Reliance Life Insurance to Nippon Life Insurance. Nippon Life Insurance the held about 49% stake in Reliance Life Insurance. in accordance with the new shareholding, Reliance Life Insurance was renamed as Reliance Nippon Life Insurance Company.
On 23 November 2016, Reliance Capital announced worth unlocking in the Radio and TV businesses which could reduce its debt by approximately 1900 crores (283 million USD) on the completion of the stake sale transactions. These transactions form a part of Reliance Capitals pronounced strategy to conquer leverage and exposure in non-core businesses of media and entertainment. Reliance Broadcast Network Limited (RBNL), which is the largest operator of FM channels in India, has signed a definitive and binding agreement with Zee Media Corporation Limited (ZMCL) to sell a staggering 49% stake in its radio broadcast business. Concurrently, Zee Entertainment Enterprises Ltd (ZEEL), which is a separate entity under Zee Group, will be acquiring 100% stake in the Groups General Entertainment TV business. The transaction tightens the combined Enterprise value of Radio and TV business to roughly 1900 crores (283 million USD).
In March 2017, Reliance Capital Limited (RCL) announced its plans to separate the Health Insurance and General insurance businesses. The Board of Directors of the General Insurance Company Limited (RGIL), which is a subsidiary of Reliance Capital Limited (RCL), has endorsed this proposal, which is subject to necessary IRDA and many other approvals. Reliance Health Insurance Ltd., which is the proposed new company for Health Insurance business, will be a wholly owned subsidiary of Reliance Capital
On 24 March 2017, Reliance Capital announced the completion of the transfer of the commercial finance division - Reliance Commercial Finance Limited (RCFL) - into a wholly owned subsidiary. RCFL is amongst the largest SME lenders in the non-banking finance sector in India with a focus on the asset-backed lending and productive asset creation. The Commercial Finance division had an aggregate asset management portfolio of 196191 crores (which included securitized portfolio) .
In July 2017, Billionloans Financial Services Pvt. Ltd. (Billionloans) declared that it had sealed a seed funding round of roughly Rs 7 crore (US$ 1 million) from the Reliance Corporate Advisory Services Limited, which is a wholly-owned subsidiary of Reliance Capital. Billionloans is a technology-enabled financial services company which is focused on flexible and affordable financing options to the individuals and small businesses which find it challenging to obtain loans from the traditional banking system to meet their aspirations. In July 2017, Reliance Capital Ltd. announced that it had received 378 crores from Nippon Life Insurance (NLI), which is a Fortune 500 company and one of the largest life insurers globally, upon conclusion of the transaction for improving Nippon Life Insurance's equity stake in Reliance Nippon Life Asset Management Limited (RNAM) to 49%. RNAM is the biggest asset manager in India concerning AUM, and it roughly manages around 358059 crores (55.2 Billion USD) across mutual funds, managed accounts, pension funds, and offshore funds.
In September 2017, shares of Reliance Home Finance Ltd. were listed on BSE and NSE following to a Scheme of Arrangement. According to the Scheme, stockholders of Reliance Capital were allocated a share free of cost in Reliance Home Finance for every each share held in Reliance Capital. Reliance Home Finance Limited (RHFL) gives a wide range of financial solutions like home loans, LAP, affordable housing loans and Construction finance. The company also presents property solutions services which help the customers in finding find their dream homes/property, along with managing exceptional financing. The company has a secure distribution network with over 1,750 distributors who are serving over 36,000 customers in more than 100 locations, through a hub-and-spoke model, throughout the country.
Reliance Home Finance Limited is a subsidiary of Reliance Capital. Reliance Money, which is a brand by Reliance Commercial Finance Limited (RCFL), is also a subsidiary of Reliance Capital Limited which was announced in October 2017. The company also has signed an agreement with Indian Renewable Energy Development Agency Limited (IREDA) to secure funding of 300 crores. IREDA is a Government of India Enterprise, which is under the administrative control of the Ministry of New and Renewable Energy (MNRE). Reliance Commercial Finance Limited will utilize this loan assistance which was offered by IREDA for lending to its renewable energy projects. In late October 2017, Reliance Nippon Life Asset Management completed an Initial Public Offer (IPO). The IPO was a mixture of the fresh issue of 2.44 crore equity shares by the company and an offer for sale the of up to 3.67 crore equity shares by Reliance Capital Limited and Nippon Life Insurance Company, the promoters who are selling shareholders.
On 17 November 2017, Reliance General Insurance Company Limited (RGI) advertised that it had signed a comprehensive Bancassurance - Corporate Agency agreement with Yes Bank, which is India's 5th largest private sector bank, with an objective to distribute many general insurance products to the customers of Yes Bank, which augmented its distribution network. Reliance General Insurance Company Ltd (RGI) also became a 100% subsidiary of Reliance Capital Limited in the same year.
Should I Buy Reliance Capital Ltd.?
Reliance Capital Ltd., a company that was incorporated in 1986, is a midcap company with a market cap of Rs 11387.06 crore, operating in Finance sector. Financial analysts and investors are quite optimistic about the rise in stock prices of Reliance Capital. The shares of Reliance Capital are trading approximately at 230 and it hasn’t seen much growth in the last few months. The shares of Reliance Capital went up to 636 in the second quarter of 2017. The company has also reported a net profit after tax deductions of 401 crores.
With Anil Ambani, planning to de-merge the wholly owned subsidiary of Reliance Capital Limited Reliance Health insurance from the parent company, it might affect the share price of the company adversely. The returns from the Reliance shares have been stable for the last quarter and analysts believe that the share prices might go down in the next financial year. Thus, buying the Reliance shares for the short or medium term is a great idea. For the long run, since the company is linked to the largest MNC of the country, Reliance, you can still try betting on the stocks.