Japan's Nippon Life Insurance has said that it has successfully completed the acquisition of 75 per cent stake in Reliance Nippon Life Asset Management (RNAM) from the Anil Ambani-controlled financial services company Reliance Capital.
Reliance Capital, which is one of the promoters of the RNAM, will further sell its remaining 4.28 per cent stake in the insurance joint venture worth around Rs 700 crore. It had already offloaded 17.06 per cent of its stake in RNAM, in three tranches, for Rs 2,480 crore to achieve the minimum public shareholding of 25 per cent in assent management company by reducing the promoter stake.
As of June quarter, Reliance Capital Ltd held 32.12 per stake in RNAM, while the other promoter Nippon Life Insurance Company owned 42.88 per cent shareholding in the company. Nippon Life had made an initial investment to acquire 26 per cent stake in 2012.
"With this latest transaction, Nippon Life's total gross investment for RNAM stake is now over Rs 7,800 crore, amongst the largest Foreign direct investment (FDI) into India in the financial services sector," Reliance Nippon Life Asset Management (RNAM) said in a filing to the Bombay Stock Exchange.
Nippon Life Insurance, a 130-year old company, is one of the largest life insurance companies in Japan, managing assets of over USD 700 billion.
Cash-strapped Reliance Capital is in the process of exiting the mutual fund (MF) business to cut its debt. Earlier in May this year, it had announced an exit from the MF business by selling its 42.88 per cent stake in RNAM to its joint venture partner Nippon Life. As of March 31, 2019, Reliance Capital had net debt of Rs 46,400 crore.
"Nippon Life's relationship with the asset management business led by Sundeep Sikka started many years back. Today, Nippon Life has further increased its stake in the interest of unitholders and shareholders of the company. Now we are proud to start this new journey as majority shareholder and look forward to a long and fruitful way ahead. The current management team will stay intact however, the name and brand of the company will be changed soon," said Yutaka Ideguchi, Director and Managing Executive Officer, Nippon Life Insurance.
"It has been always been a great opportunity to work closely with Nippon Life. T hey have been very supportive shareholders since the very beginning and this transaction will set the stage for the long-term growth of the company. I am confident that we will continue to benefit from Nippon Life's leading practices in risk management and leverage its global network for our International and Alternate businesses," said Sundeep Sikka, Executive Director and CEO, RNAM.
Edited by Chitranjan Kumar