Japan’s Nippon Life Insurance will acquire an additional 23 per cent in Anil Ambani’s Reliance Life Insurance for Rs 2,265 crore ($348 million).
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Foreign insurers are slowly increasing their activity in India.
Speaking to TOI, Reliance Capital CEO Sam Ghosh said that the company was also in talks with non-life multinationals looking for a presence in India to sell the stake in Reliance General Insurance.
U.K.’s Standard Life earlier this year increased its stake in HDFC Life to 35% from 26% for 17 billion rupees ($256 million) in a deal that valued the Indian joint venture at almost 190 billion rupees ($3 billion).
“Nippon Life’s investment represents implied embedded value multiple of over 3 times, the highest in the industry till date”, according to the statement.
The transaction pegs Reliance Life Insurance’s valuation at approx.
Nippon has also committed itself an investment of Rs 3,303 crore ($508 million) to pick up a 49 per cent stake in Reliance Capital Asset Management.
J. Sagar Associates advised Reliance Life Insurance with a team led by Partners Dina Wadia and Gautam Gandotra along with Senior Associate Gagan Sharma and Associate Upamanyu Talukdar.
ICICI Bank, India’s biggest private sector bank, recently agreed to sell a 6 per cent stake in ICICI Prudential Life Insurance Company in two separate deals to billionaire Azim Premji and Singapore state investor Temasek for Rs 1,950 crore which put the valuation of the company at Rs 32,500 crore.
For the year ended March 31, 2015, Reliance Life clocked premium income of Rs 4,592 crore with new business premium of Rs 2,070 crore and net profit of Rs 135 crore.
With this transaction, the Japanese company has invested an aggregate of Rs 53.27 billion (USD 819 million) for acquiring 49% take in Reliance Life Insurance.
The company has signed definitive agreements to increase its stake in Reliance Life Insurance from the existing 26% to 49%.
In May, the Foreign Investment Promotion Board had approved AXA group’s proposal to increase its stake in its life and general insurance joint ventures with Bharti group at a cumulative investment of Rs 1,290 crore.
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In line with the new shareholding structure, the name of the company will also be changed to Reliance Nippon Life Insurance Company Limited.
