Nippon Life to invest $184 mn for additional stakes

Mumbai, Oct 13 (IANS) Japanese life insurer Nippon Life Insurance will acquire 14 percent additional stakes in Reliance Capital Asset Management Ltd for Rs.1,196 crore ($184 million), both the companies said on Tuesday.

Both the companies signed a definitive agreement to this effect on Tuesday, said a statement issued here.

Nippon Life will increase its stakes in Reliance Capital Asset Management – part of Reliance Capital Ltd – from the current 35 percent to 49 percent in tranches.

The boards of directors of both the companies – Nippon Life Insurance and Reliance Capital Asset Management – have approved the increase in stake by the Japanese partner, subject to regulatory approvals.

“Both Reliance Capital and Nippon Life Insurance have enjoyed an extraordinary relationship in the last few years and we see this mutual respect and commitment growing stronger with time. Together, we are determined to grow our businesses multifold and have stronger footprint in India and abroad,” Anil Ambani, Reliance Group chairman, was quoted as saying in the statement.

The transaction pegs Reliance Capital Asset Management’s valuation at Rs.8,542 crore ($1.3 billion), the highest valuation till date for any Indian asset management company.

According to Reliance Capital Asset Management, the transaction is expected to be completed within this fiscal subject to regulatory approvals.

Post-approvals, Nippon Life Insurance would become the co-sponsor in Reliance Capital Asset Management.

In line with the new shareholding structure, the name of the company will also be changed from Reliance Capital Asset Management to Reliance Nippon Life Asset Management, the statement said.

“Reliance Group and Nippon Life have built a strong partnership through exchanges and collaborations in various fields. 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,” Yoshinobu Tsutsui, president, Nippon Life Insurance was quoted as saying in the statement.

Reliance Capital Asset Management is the largest asset manager in India managing Rs. 2,43,162 crore (US$ 38.3 billion) as on June 30, 2015, across mutual funds, pension funds, managed accounts and offshore funds

Nippon Life Insurance had earlier acquired 26 per cent stake in Reliance Capital Asset Management at an aggregate value of Rs.1,450 crore (US$ 240 million) in 2012.

The transaction pegged the total valuation of Reliance Capital Asset Management at approximately Rs.5,600 crore ($920 million).

Subsequently, the Japanese company further hiked its holding in Reliance Capital Asset Management by nine percent to 35 percent, in February this year at an aggregate value of Rs.657 crore ($108 million) pegging the Indian company’s valuation at Rs.7,300 crore ($1.2 billion).

According to Nippon Life Insurance, the two companies have developed mutual understanding by exchanging human resources.

“In addition, both companies have also developed a number of business collaborations, such as mutually supplying investment products to each other for retail investors in both Japan and India, and the net asset value of those publicly offered investment trusts had reached JPY 80 billion (approximately INR 44 billion) as of September 30, 2015,” Nippon Life Insurance said.

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