Nippon Life Insurance (NLI) has announced to increase 23% stake in Reliance Life Insurance, a part of Reliance Capital group for Rs 22.65 billion (USD 348 million).

The company has signed definitive agreements to increase its stake in Reliance Life Insurance from the existing 26% to 49%. The boards of directors of both the companies have approved the increase in stake by the Japanese partner, subject to regulatory approvals.

Nippon Life Insurance, also called Nissay, is one of Japan's leading private life insurer with approx. revenues of Rs 4.01 trillion (USD 61 billion) and profits of over Rs 162 billion (USD 2.5 billion).

The transaction pegs Reliance Life Insurance's valuation at approx. Rs 100 billion (USD 1.5 billion), amongst the highest valuations for any life insurance company in the country. Nippon's investment also represents an implied Embedded Value (EV) multiple of over 3 times for Reliance Life Insurance, the highest for any private insurer in India till date.

In line with the new shareholding structure, the name of the company will also be changed to Reliance Nippon Life Insurance Company.

Anil D. Ambani, chairman, Reliance Group said, "We are delighted that the outstanding relationship between our two companies has now grown into an equal partnership, with NLI increasing their stake - first, in our asset management business, and now, in our Life Insurance business - to 49%. Life Insurance is one of Reliance Capital's major businesses, and we believe Nippon Life's experience of over 125 years will accelerate our growth in this space."

Yoshinobu Tsutsui, president, Nippon Life Insurance said, "Ever since our initial investment in 2011, we have developed a mutual understanding and built more than just a financial partnership but an interactive relationship based on solid trust."

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.

Nippon has also committed an investment of Rs 33.03 billion (USD 508 million) for acquiring 49% stake in Reliance Capital Asset Management, thereby taking its total investment to Rs. 86.30 billion (USD 1.3 billion), the largest FDI in the financial services sector.

Shares of Reliance Capital gained Rs 10.75, or 2.63%, to trade at Rs 419.00. The total volume of shares traded was 335,606 at the BSE (2.10 p.m., Tuesday).