Nippon Life buys 14% more stake in RCAM for Rs 1196 crore

The Japanese company will be investing an aggregate value of Rs 1,196 crore to acquire an additional 14 per cent stake in RCAM, in tranches, to reach a 49 per cent stake.

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

Post this transaction, Reliance Capital Asset Management will be renamed to “Reliance Nippon Life Asset Management”, the company said.

The 125-year-old private life insurance company is planning to invest ¥1.5tn in three years for mergers and acquisitions, reported Kyodo news agency. In January 2012, it had picked a 26 per cent stake for Rs 1,450 crore, valuing Reliance Capital Asset Management at Rs 5,600 crore. This valued Reliance Capital Asset Management at Rs 7,300 crore.

Nippon Life Insurance (NLI), which holds 35 % stake in RCAM at present, signed definitive agreements to increase its stake to 49 % in the Reliance Group company, RCAM said in a statement.

The major Japanese life insurer, which last month agreed to buy smaller rival Mitsui Life Insurance Co.by March for ¥300 billion to ¥350 billion, is expected to spend ¥200 billion to ¥300 billion ($2.5 billion) for the Australian insurer, the sources said.

Reliance Capital Asset Management, India’s largest asset manager, had Rs.2,43,162 crore ($38.3 billion) assets under management as on June 30, 2015, across mutual funds, pension funds, managed accounts and offshore funds.

RCAM runs the country’s third-largest mutual fund house behind HDFC and ICICI Prudential, as per data compiled by industry body AMFI.

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. According to Association of Mutual funds in India, average assets under management of Reliance Mutual Fund stood at Rs1.