Nippon raises Reliance MF stake to 35% for Rs657 cr; to raise it to 49% in 2 years

Nippon Life insurance Company has reached an agreement with Reliance Capital Asset Management Company Ltd (RCAM), a subsidiary of Reliance Capital to raise its stake from the existing 26 per cent to 49 per cent, the eligible limit for foreign direct investment in the insurance sector in the country.

Accordingly, Nippon said, it would purchase an additional 9-per cent stake in Reliance Capital Asset management Ltd for approximately Rs657 crore (JPY 12.5 billion), raising its stake to 35 per cent.

Nippon already holds a 26-per cent stake in RCAM, which it had acquired for Rs1,450 crore in 2012, valuing the company at Rs5,600 crore at that time.

The latest acquisition values Reliance Capital Asset Management Company (RCAM), which runs Reliance MF, at Rs7,300 crore, as per the deal announced today.

Further, in compliance with applicable laws, Nippon said, it would consider raising its stake in the company to 49 per cent over the next two years.

Nippon will also raise its representation on the board of Reliance Capital Asset management Ltd in line with its holding in the company.

In line with its strengthened capital and in view of the synergies of the two groups, Nippon also plans to grow its asset management business globally.

RCAM, part of Reliance Capital, the financial services arm of Anil Ambani-led Reliance Group, is the largest asset manager in India, in terms of Asset under Management, managing Rs 2,18,338 crore ($36 billion) as of 30 September 2014, across mutual funds, pension funds, managed accounts and offshore funds.

Nippon Life manages over $500 billion (Rs30,00,000 crore) in assets, highest in the world for any life insurer.