Nippon Life Insurance (NLI), a Fortune 100 company and the seventh largest life insurer in the world, has agreed to increase its stake in Reliance Capital Asset Management (RCAM), a part of Reliance Capital. NLI will be increasing its stake in Reliance Capital Asset Management from the existing 26% to 49% in two or more tranches.
''We welcome Nippon’s decision to further strengthen this partnership and acquire an additional stake in our asset management company. We strongly believe their expanded role in the company will accelerate our growth, reach and performance,'' said Sam Ghosh, CEO, Reliance Capital.
''Our partnership with Reliance Group is an exemplary example of successful collaboration between two big Corporations and countries. We look forward to strengthening this relationship and using the collective experience of the two corporations to the advantage of the two global economies,'' said Yoshinobu Tsutsui, president, Nippon Life Insurance.
The boards of directors of both the companies-Nippon Life Insurance and Reliance Capital Asset Management-have approved the stake increase by the Japanese partner, subject to regulatory approvals.
The Japanese company will be investing an aggregate value of Rs 6.57 billion (USD 108 million) to acquire an additional stake of 9% in RCAM in the first tranche, to reach a 35% stake. The transaction pegs Reliance Capital Asset Management’s valuation at Rs 73 billion (USD 1.2 billion), the highest valuation till date for any asset management company in the country.
This transaction is expected to be completed within the current financial year, subject to receipt of regulatory approvals.
Subsequently, Nippon Life Insurance will have an option to increase its stake further by an additional 14%, to reach 49%, in tranches.
RCAM is the largest asset manager in India managing Rs 2,183.38 billion (USD 36.0 billion) as on Sept. 30, 2014, across mutual funds, pension funds, managed accounts and offshore funds.
Nippon Life Insurance is already a strategic partner in Reliance Capital Asset Management. The company acquired 26% stake in Reliance Capital Asset Management at an aggregate value of Rs 14.50 billion (USD 240 million) in 2012. The transaction pegged the total valuation of Reliance Capital Asset Management at approximately Rs 56 billion (USD 920 million).
Shares of the company gained Rs 10.35, or 2.15%, to trade at Rs 491.40. The total volume of shares traded was 410,356 at the BSE (12.49 p.m., Wednesday).