The Japanese company will be investing an aggregate value of Rs1,196 crore ($184 million) to acquire the additional 14 per cent stake in Reliance Capital Asset Management. The transaction pegs the valuations of RCAM approximately at Rs 8,542 crore. Post the stake sale, Reliance MF will be renamed as Reliance Nippon MF, a joint release from the companies said.
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Nippon’s life insurance arm, Nippon Life Insurance (NLI), which holds 35 per cent stake in RCAM now, also signed a definitive agreement to increase its stake to 49 per cent in the Reliance Group company.
Nippon Life had acquired 26 per cent stake in RCAM at an aggregate value of Rs 1,450 crore ($240 million) in 2012.
The holding of Nippon Life Insurance, one of the largest life insurers in the world, in RCAM will be increased from 35 per cent to 49 per cent in tranches. This valued Reliance Capital Asset Management at Rs 7,300 crore.
“Reliance Group and Nippon Life have built a strong partnership through exchanges and collaborations in various fields”.
The major Japanese life insurer, which last month agreed to buy smaller rival Mitsui Life Insurance Co.by March for ¥300 billion to ¥350 billion, is expected to spend ¥200 billion to ¥300 billion ($2.5 billion) for the Australian insurer, the sources said.
Billionaire Anil Ambani-led Reliance Capital has interests in asset management and mutual funds, life and general insurance, equities and commodities broking, other activities in financial services.
At the end of September, the company’s mutual fund business stood at Rs 1.52 lakh crore. “We believe this investment will further strengthen the ties of both companies, achieve perpetual growth and contribute to further economic development of India and Japan”.
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It is looking to sell its insurance business amid global moves to tighten control on the sector, while Nippon Life wants to expand overseas to shore up revenue under threat from Japan’s rapidly aging and declining population. Since 2012, Reliance Capital Asset Management’s valuations have increased by over 50 per cent, and its mutual fund assets have grown almost 85 per cent.
