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Business News/ Companies / News/  Nippon Life hikes stake in Reliance Capital Asset Management
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Nippon Life hikes stake in Reliance Capital Asset Management

The agreement gives Nippon an option to increase its stake in Reliance Capital AMC up to 49% in 2-3 years

Reliance Capital AMC is India’s third-largest fund house in an industry that’s worth about `10 trillion. Photo: Abhijit Bhatlekar/MintPremium
Reliance Capital AMC is India’s third-largest fund house in an industry that’s worth about `10 trillion. Photo: Abhijit Bhatlekar/Mint

Mumbai: Nippon Life Insurance Co. will pick up an additional 9% stake in Reliance Capital Asset Management Co. Ltd, raising its holding to 35%, the latter said on Wednesday.

The agreement also gives Nippon an option to increase its stake in the asset management company (AMC) to up to 49% in 2-3 years.

“We just signed the deal today (Wednesday) morning. Life goes on for the Indian investors as usual. At present, Nippon has one of its own nominee on the AMC’s board. After raising its stake, it will add another board member; a Nippon nominee. Nippon will continue to share their international best practices with us," said Sundeep Sikka, chief executive officer, Reliance Capital AMC.

Up until now, Nippon held 26% in Reliance Capital AMC, a stake it had bought up in January 2012. The additional stake of 9% comes at a price of 657 crore. This values Reliance Capital AMC at 7,300 crore, which comes up to about 6% of its assets of 1.22 trillion (average assets for the quarter-ended September 2014).

Reliance Capital AMC is India’s third-largest fund house in an industry that’s worth about 10 trillion.

Nippon Life manages over $500 billion in assets, and is the seventh largest life insurer in the world.

On 1 September, Reliance Capital AMC launched two schemes in Japan, in collaboration with Nissay Asset Management Corp., Japan, Nippon Life’s subsidiary company, that would collect money from Japan to be invested in Indian markets. “These funds have collected more than 1,000 crore that has come to India," Sikka said.

“We welcome Nippon’s decision to further strengthen this partnership and acquire an additional stake in our asset management company. We strongly believe their expanded role in the company will accelerate our growth, reach and performance," Reliance Capital CEO Sam Ghosh said.

Nippon Life also holds 26% in Reliance Life Insurance Co., which it had bought for 3,062 crore. The deal was completed in October 2011 and it had valued the Indian insurer at over 11,500 crore at that time.

The Indian government has now proposed to increase foreign direct investment cap in the insurance sector to 49% from 26%. The proposal has been cleared by the Union cabinet, but needs to be approved by the Parliament.

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Published: 26 Nov 2014, 01:12 PM IST
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