Nippon Life looking to hike stake in Reliance Life as soon as possible

Nippon Life Insurance of Japan wants to hike its stake in its Indian joint venture, Reliance Life Insurance, to 49 per cent from 26 per cent as soon as India notifies its policy decision to raise the foreign equity cap in the sector, a Tokyo newspaper said today.

"The two sides are in talks and will likely seal the deal as soon as the legislation raising caps on foreign investment in Indian insurers passes," said the Nikkei Asian Review, quoting Reliance Group managing director Amitabh Jhunjhunwala.

According to the report the Indian group, led by Anil Dhirubhai Ambani, welcomes additional the investment by Nippon, which already holds the current maximum permissible stake of 26 per cent in 2011 (See: Nippon Life set to buy 26 per cent in Reliance Life for $724 million ).

"Nippon Life sees great potential in India. The penetration rate of insurance services there, based on the size of its economy, amounts to less than half those in Japan and other developed countries," said the report.

"The number of people in the insurance market will likely balloon as the middle class expands," it said, adding the Japanese company hopes the investment will strengthen its ties with Reliance in product development and sales, to develop a future source of income.

Reliance Life Insurance adopted Nippon Life sales techniques after Nippon made its first investment back in 2011. The new business model, a departure from Indian traditions, has proved a success, Jhunjhunwala said.

Reliance Life plans to inculcate more of Nippon Life's strategies and practices in the future. It aims to increase sales offices from 30 to 50 as well as double its sales force from 750 or so to 1,500, the report added.

Over the weekend, the two groups announced two funds for Japanese investors in the Indian equities and bonds markets, as also to jointly start a commercial bank when permission comes from Indian authorities. (Nippon Life to tie up with Anil Ambani's Reliance for investment funds).