Anil Ambani Group's Reliance Capital is aiming to cut its outstanding debt by up to Rs 12,000 crore in four months. The deleveraging plan hinges on stake sale in mutual fund (MF) arm to foreign partner Nippon Life and a public offering of general insurance arm.

Reliance Capital in statement on Thursday said it has embarked on an “strategy to reduce debt by approximately Rs 10,000 to Rs 12,000 crore in the next three to four months. This substantial 50- 60 per cent reduction in Reliance Capital’s debt, will be achieved by monetisation of its 43 per cent stake in Reliance Nippon Life Asset Management and 49 per cent stake in Reliance General Insurance Company, along with several non-core investments.”

Currently, Reliance Capital has outstanding debt of about Rs 18,000 crore.

Last month, Reliance Capital had announced that it offered its 43 per cent stake in Reliance Nippon Life to equal partner Nippon Life. Following the announcement, there were reports of three sovereign wealth funds from Middle East showing interest in buying Reliance Capital’s stake.

However, sources indicate that the Japanese firm is keen on buying the stake to gain full control of the country’s fifth-largest asset management company.

“The broad contours of the deal are being worked out. Nippon Life has given an in-principle approval for the deal,” said a person privy to the development.

Reliance Capital and Nippon Life couldn’t be immediately reached for a comment.

Shares of Reliance Nippon Life on Thursday rose 5.3 per cent to close at Rs 195 on the BSE.

“The strategic sale of the controlling stake in Reliance Nippon Life is expected to be at a significant premium to market,” said Reliance Capital in its latest statement.

Currently, both Reliance Capital and Nippon Life own 42.9 per cent each in Reliance Nippon Life, which is valued at Rs 11,918.7.

If Nippon Life buys Reliance Capital’s stake it will end up with 85.76 per cent stake. In addition, it will have to make a 26 per cent open offer to minority shareholders.

Sources say the deal could be finalized in the first quarter of 2019-20.

Meanwhile, Reliance General Insurance, which is fully owned by Reliance Capital, is awaiting market regulator Sebi’s nod for its initial public offering. The company had re-filed its offer document on February 8 after the lapse of one-year period for its previous approval.

The IPO size is expected to be in the range of Rs 1,500 crore to Rs 2,000 crore.

Reliance Capital said it is in advanced stage of monetising several valuable non-core investments. These include a strategic stake sale in Prime Focus and other media assets. According to December quarter shareholding data, group firm Reliance Mediaworks Financial Services held around 35 per cent stake in Prime Focus, which is valued at about Rs 2,000 crore.