The Anil D Ambani group is planning to exit the mutual fund business.

Financial services firm Reliance Capital (RCap) on Thursday said it has invited partner Nippon Life Insurance to acquire its entire 42.88 per cent stake in Reliance Nippon Life Asset Management (RNAM).

Japan’s Nippon Life Insurance already holds a 42.88 per cent stake in RNAM.

“Reliance Capital has invited its partner Nippon Life Insurance to make an offer to acquire up to 42.88 per cent stake held by Reliance Capital in Reliance Nippon Life Asset Management,” the company said in a filing to the bourses on Thursday.

The company added it would make a further announcement at an appropriate time.

According to Bombay Stock Exchange data, as on December 31, 2018, Reliance Capital held a 42.9 per cent stake in Reliance Nippon Life Asset Management.

The announcement led to the shares of Reliance Capital and RNAM rising on the bourses on Thursday. While the Reliance Capital share rose 11.13 per cent, or Rs 16.15, to settle at Rs 161.20 on the BSE, the RNAM share spurted almost 20 per cent to close at Rs 187.05.

At the current market price, RCap could rake in over Rs 4,900 crore.

However, market circles said the transaction would also involve a control premium, thereby leading to a good mark-up over the current market price.

They estimate the final valuation to come between Rs 7,000 crore and Rs 8,000 crore.

For RCap, the transaction is expected to clear around 40 per cent of its outstanding debt worth Rs 18,000 crore.

The proposed share sale would also trigger an open offer to be made for a 26 per cent stake in the company.

If the deal is signed, the company would become the largest wholly foreign-owned mutual fund in India.

Anil Ambani-led Reliance Group firms have been trying to monetise some of their assets and bring down its debt significantly.

RNAM, formerly Reliance Capital Asset Management, is the asset manager of Reliance Mutual Fund (RMF).

For the December quarter, RNAM reported a 17 per cent decline in consolidated net profit at Rs 109.52 crore compared with Rs 132.01 crore in the same period of the previous year.

During the period, its revenue from operations declined to Rs 349.85 crore from Rs 398.98 crore.

Its average assets under management (AAUM) stood at Rs 2.36 lakh crore during the period with over 88 lakh folios.