New Delhi : In the biggest ever FDI in Indian mutual fund industry, Japanese giant Nippon Life Insurance acquired 14 % additional stake in leading fund house Reliance Capital Asset Management Company for Rs 1,196 crore, hiking its stake to 49 %.
This pegs the valuation of RCAM, which runs Reliance Mutual Fund and is part of Anil Ambani led conglomerate Reliance Group’s financial services arm Reliance Capital, at Rs 8,542 crore or $1.3 billion.
After rising 6.28 % to Rs 403.30 intra-day on BSE, shares of Reliance Capital finally ended at Rs 398.80, up 5.10 % from its previous close.
Nippon Life Insurance (NLI), which holds 35 % stake in RCAM at present, signed definitive agreements to increase its stake to 49 % in the Reliance Group company, RCAM said in a statement. The deal has been approved by the boards of directors of both the companies, and Reliance Capital Asset Management will be renamed Reliance Nippon Life Asset Management.
“We believe this investment will further strengthen the ties of both companies, achieve perpetual growth and contribute to further economic development of India and Japan,” NLI President Yoshinobu Tsutsui said. Post regulatory approvals, Nippon Life Insurance would become the co-sponsor in Reliance Capital Asset Management.
Nippon Life had acquired 26 % stake in RCAM at an aggregate value of Rs 1,450 crore (USD 240 million) in 2012. The transaction pegged the total valuation of RCAM at approximately Rs 5,600 crore (USD 920 million). Subsequently, the Japanese company increased its stake by 9 %, to 35 %, in February this year at an aggregate value of Rs 657 crore (USD 108 million) that pegged the valuation of RCAM at Rs 7,300 crore (USD 1.2 billion).
Reliance Capital Asset Management is the largest asset manager in India managing Rs 2,43,162 crore ($ 38.3 billion) as on June 30, 2015, across mutual funds, pension funds, managed accounts and offshore funds.
Nippon Life Insurance manages over USD 520 billion (Rs 33.8 lakh crore) in assets – amongst the largest total assets in the world for any life insurer.
