Nippon Life Insurance has approached the administrator of financially-stricken Reliance Capital, stating that it’s in search of a strategic partner to purchase Reliance Capital’s stake in Reliance Nippon Life Insurance Company.
Nippon Life would like that Reliance Nippon Life not be merged with one other firm, reported Hindu Business Line quoting sources with information of the matter.
Reliance Nippon Life Insurance is a 51:49 three way partnership between Reliance Capital and Nippon Life. Creditors of debt-ridden Reliance Capital have given the nod to Aditya Birla Capital to accumulate the previous’s 51% stake in Reliance Nippon Life.
Aditya Birla Capital is the promoter of two insurance firms—Aditya Birla Health Insurance and Aditya Birla Sun Life Insurance, which is a 51:49 three way partnership between the Aditya Birla Group and Canada’s Sun Life Financial.
IRDAI pointers don’t permit an entity to carry a stake of over 10% in two insurance firms. This signifies that if Aditya Birla Capital’s bid for Reliance Nippon Life Insurance is accepted, the latter would probably be merged with Aditya Birla Sun Life Insurance—one thing that Nippon Life Insurance shouldn’t be in favour of.
In case the merger goes by means of, Nippon Life’s stake shall be diluted as a result of presence of the third partner, Sun Life Financial. Nippon Life’s stake might fall to as low as 15% within the merged entity, sources stated.
“We want to bring in a strategic partner with whom we can do business for the long term,” Nippon Life stated in a letter to the administrator, including that it has no intention of promoting its 49% stake or of seeing the three way partnership merge with one other life insurance firm .
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