Anil Ambani’s Reliance Group will sell its FM radio business by divesting its entire stake in BIG FM Radio to Jagran Prakashan-owned Music Broadcast Ltd (MBL) for an estimated value of Rs 1,200 crore, an official statement Monday said.
Reliance Capital andReliance Land (a part of Reliance Capital Group) will divest their entireequity stake in Reliance Broadcast Network Ltd (RBNL) to Music Broadcast Ltd(MBL).
The move would help in reducing the loan burden of theReliance group firms, it added.
“This transaction is part of our overall strategy toreduce exposure in non-core businesses and will reduce our debt by an estimatedRs 1,200 crore,” the statement Reliance Capital CFO Amit Bapna said in astatement.
RBNL operates under the brand name BIG FM Radio network with58 stations across the country.
MBL will initially acquire a 24 per cent equity stake ofRBNL by way of a preferential allotment for Rs 202 crore.
Thereafter, subject to the receipt of all regulatoryapprovals, MBL will acquire all of the remaining equity stake held by RelianceCapital and Reliance Land in RBNL at a total enterprise value of Rs 1,050crore.
In addition, RCap will receive an around Rs 150 crore fromthe disposal of other assets of RBNL which do not form part of the transactionwith MBL, in accordance with the regulations.
In a separate release, MBL that operates Radio City said itsboard Monday approved the acquisition of RBNL.
The combined network will have 79 radio stations making itthe largest radio network in the country, MBL said in a release adding,”The entire transaction is expected to close in the first quarter ofFY21.”
Last week RCap had said it will exit the mutual fundbusiness 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 inReliance Nippon Asset Management for Rs 6,000 crore and other ongoingmonetization plans, we expect RCaps debt to reduce by nearly Rs 12,000 crore(close to 70 per cent) in the current financial year,” Bapna added.
The proposed transaction is subject to regulatory and otherapprovals.EY India is acting as the exclusive investmentbanker to the transaction, and Phoenix Legal is acting as legal advisors toReliance Capital group.