Rel Cap to divest 26% in insurance arm

Anil Ambani Group firm Reliance Capital has initiated the process of divesting up to 26 per cent stake in its life insurance subsidiary and is mulling options like bringing in a strategic foreign investor and an initial public offer. "We are planning to divest 26 per cent stake in our insurance arm. We may either go in for an IPO or for a strategic investor or we might also go in for a combination of both the options," Reliance Capital CEO Sam Ghosh said. Without divulging any details as to how much capital the company is planning to raise through this option, Ghosh said "the funds raised through this divestment would be partly infused into the insurance arm and partly into Reliance Capital." Regarding the Insurance Regulatory and Development Authority initiating a process of formulating guidelines for IPOs he said, the sooner the guidelines come the better. The company, which has been going solo so far, has decided on this divestment at this point of time because it will give a better shareholder value, besides sentiments in the market is also looking bright. "We have not yet zeroed in on any foreign investor. We have just started the process and it is expected to be completed in three to four months," Ghosh added. He said even if the government increases foreign investment up to 49 per cent, the company plans to divest only 26 per cent stake to any overseas player.