Mumbai: After signing a pact to exit the mutual fund business last week, Anil Ambani's Reliance Group is now exiting FM radio business as well. The group will divest its entire stake in BIG FM Radio to -owned Music Broadcast Ltd (MBL) for Rs 1,200 crore in a two-phase deal, a statement from the group said on Monday.
Reliance Capital and Reliance Land--a part of Reliance Capital Group--will divest its entire equity stake in Reliance Broadcast Network Ltd (RBNL) to Music Broadcast Ltd.
The move would help reduce the loan burden of the Reliance Group firms, the statement said.
"This transaction is part of our overall strategy to reduce exposure in non-core businesses and will reduce our debt by an estimated Rs 1,200 crore," Reliance Capital CFO Amit Bapna said in a statement.
RBNL operates under the brand name BIG FM Radio network with 58 stations across the country.
MBL will initially acquire a 24 per cent equity stake of RBNL by way of a preferential allotment for Rs 202 crore.
Thereafter, subject to the receipt of all regulatory approvals, MBL will acquire all of the remaining equity stake held by Reliance Capital and Reliance Land in RBNL at a total enterprise value of Rs 1,050 crore.
In addition, RCap will receive around Rs 150 crore from the disposal of other assets of RBNL that do not form part of the transaction with MBL, in accordance with the regulations.
In a separate release, MBL that operates Radio City said its board on Monday approved the acquisition of RBNL.
The combined network will have 79 radio stations making it the largest radio network in the country, MBL said in a release adding, “The entire transaction is expected to close in the first quarter of FY21.”
Last week, RCap had said it would exit the mutual fund business by selling its stake in Reliance Nippon Life Asset Management (RNAM) to its joint venture partner Japan's Nippon Life Insurance.
"Together with the recently announced stake sale in Reliance Nippon Asset Management for Rs 6,000 crore and other ongoing monetisation plans, we expect RCaps debt to reduce by nearly Rs 12,000 crore (close to 70 per cent) in the current financial year," Bapna said.
The proposed transaction is subject to regulatory and other approvals.
EY India is acting as the exclusive investment banker to the transaction, and Phoenix Legal is acting as legal advisors to Reliance Capital group.
