Nippon Life hikes stake in RCAM to 49%

In the biggest ever foreign direct investment in the Indian mutual fund industry, Japan's Nippon Life today acquired a 14 per cent additional stake in leading fund house Reliance Capital Asset Management Company for Rs1,196 crore, hiking its stake from 35 per cent to 49 per cent.

 
Anil Ambani, Chairman, Reliance Capital, with Yoshinobu Tsutsui, President, Nippon Life Insurance  

"Nippon Life Insurance (NLI) has signed definitive agreements to increase its stake in Reliance Capital Asset Management (RCAM) to 49 per cent from the existing 35 per cent in tranches," the Anil Dhiribhai Ambani Group company said in a regulatory filing.

The boards of directors of both the companies have approved the increase in stake by the Japanese partner, subject to regulatory approvals.

''Together we are determined to grow businesses multifold and have stronger footprint in India and abroad,'' Reliance ADAG chairman Anil Ambani said,.

The Japanese company will be investing an aggregate value of Rs1,196 crore ($184 million) to acquire the additional 14 per cent stake in Reliance Capital Asset Management. The transaction values RCAM at Rs8,542 crore ($1.3 billion).

This transaction is expected to be completed within the current financial year. After the regulatory 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.

Reliance Capital Asset Management has assets under management worth Rs2,43,162 crore as on June 2015, across mutual funds, pension funds, managed accounts and offshore funds.

Nippon Life Insurance had acquired a 26-per cent stake in RCAM for Rs1,450 crore in 2012. Subsequently, the Japanese company increased its stake by 9 per cent to 35 per cent in February 2015.

Nippon Life had acquired 26 per cent stake in RCAM at an aggregate value of Rs. 1,450 crore ($240 million) in 2012.

Subsequently, the Japanese company had increased its stake by 9 per cent, to 35 per cent, in February this year at an aggregate value of Rs. 657 crore ($108 million) that pegged the valuation of RCAM at Rs. 7,300 crore ($1.2 billion).

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

Nippon Life Insurance manages over $520 billion (Rs 33.8 lakh crore) in assets - amongst the largest total assets in the world for any life insurer.