Nippon Life Insurance close to Reliance Capital deal

Reliance Nippon Life AMC could be the largest foreign owned asset management company in India
Nippon Life Insurance close to Reliance Capital deal
Nippon Life Insurance and the Anil Ambani-led Reliance group company Reliance Capital are in advanced stages of negotiation on finalising the valuation of the stake.
By James Mathew
Wed 24 Apr 2019 11:19 AM

Japanese insurance major Nippon Life Insurance Co is understood to be close to striking a deal with Reliance Capital to acquire the latter’s equity stake in their India joint venture, Reliance Nippon Life Asset Management Ltd, industry sources close to the deal said.

“Nippon Life Insurance has in principle agreed to exercise its first right to acquire the stake in its JV with Reliance Capital and is currently in the process of carrying out the due diligence of the company,” an industry source close to the development told Arabian Business.

Reliance Capital official spokesperson declined to comment on the issue.

Arabian Business has contacted Nippon Life Insurance Company for comment.

Industry sources said Nippon Life Insurance and the Anil Ambani-led Reliance group company Reliance Capital are in advanced stages of negotiation on finalising the valuation of the stake.

“The two are expected to arrive at a definitive agreement on the stake acquisition deal in a fortnight,” these sources said.

Reliance Capital was said to be looking at a valuation of around $1 billion for its 42.88 percent stake in the JV.

Both Reliance Capital and Nippon Life Insurance hold 42.88 percent stake each in the joint venture, which has about $11.95 billion assets under management (AUM) currently.

The company’s shares were being traded at $2.90 a share on the Bombay Stock Exchange on Wednesday, making the total valuation of the Reliance Capital's stake in the JV at about $760 million.

Sources, however, said the company would demand a premium for its stake since “it will be a sole-control transaction’.

Arabian Business had earlier reported that Investment Corporation of Dubai (ICD) and Abu Dhabi Investment Authority (ADIA) were keen to acquire the stake of Reliance Capital in Reliance Nippon Life Asset Management Ltd, having approached the Anil Ambani group company directly.

The third largest investment management company by profit in India, Reliance Nippon Life AMC is the asset manager for all mega India government employee provident fund and pension funds, such as the EPFO (Employee Provident Fund Organisation), PFRDA (Home-Pension Fund Regulatory and Development Authority), CMPFO (Coal Mines Provident Fund Organisation) and ESIC (Employees’ State Insurance Corporation).

If deal happens, Reliance Nippon Life AMC could be the largest foreign owned asset management company in India.

The financially troubled Anil Ambani group has put on the block its stake in its JV with Nippon Life Insurance to raise funds to pay off part of Reliance Capital’s approximately $2.54 billion debt. It has indicated that it hopes to wipe off 40 percent of its debt through the stake sale.

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