Hero FinCorp seeks 100 per cent stake in RGI

Hero FinCorp is looking to acquire 100 per cent stake in Reliance General Insurance and is set to make an offer this month.

RCL will most likely seek an amount of Rs. 6,000 crore from Hero FinCorp in exchange for 100 per cent stake in RGI.This move is expected to lower the debt levels of RCL by an estimated Rs. 9,000 crore. As of May 2019, the company’s debt stood at Rs. 18,000 crore.

Reliance was originally looking to sell 49 per cent stake in RGI. However, the plan was amended to sell off 100 per cent stake in the hopes of easing the burden of liabilities.

Initially, RGI had pursued a valuation of Rs. 7,500 crore to Rs. 8,000 crore via an Initial Public Offer (IPO). However, the plan was abandoned. At the end of FY2019, RGI’s book value came in at Rs. 1,600 crore.

Reliance General Insurance (RGI) is a subsidiary of Reliance Capital Ltd. (RCL). Hero FinCorp is the retail lending arm of Hero MotoCorp.

On Tuesday, the shares of RCL opened at Rs. 61.25, and hit a high and low of Rs. 61.70 and Rs. 58.40, respectively. The stock closed at Rs. 59.15, down 2.95 per cent. Meanwhile, the shares of Hero MotoCorp Ltd. opened at Rs. 2,390.00, and hit a high and low of Rs. 2,456.45 and Rs. 2,374.05, respectively. The stock closed at Rs. 2,441.20, up 2.56 per cent.