Japan’s Nippon Life on Tuesday said that it has signed definitive agreements to increase its stake in India’s Reliance Life to 49 per cent from 26 per cent earlier for Rs 2,265 crore.
Reliance Life gets the enterprise value multiple of over 3, highest in the industry till date.
Despite the overall slowdown in the insurance sector, Reliance Life manages a strong valuation of approximately Rs 10,000 crore and highest EV multiple across Life insurance companies.
The Boards of Directors of both the companies – Nippon Life Insurance(NLI) and Reliance Capital – have approved the increase in stake by the Japanese partner, subject to regulatory approvals.
The Japanese company will be investing an aggregate value of Rs 2,265 crore to acquire an additional 23 per cent stake in Reliance Life Insurance to reach a 49 per cent stake.
“We are delighted that the outstanding relationship between our two companies has now grown into an equal partnership, with NLI increasing their stake – first, in our asset management business, and now, in our Life Insurance business – to 49 per cent. Life Insurance is one of Reliance Capital’s major businesses, and we believe Nippon Life’s experience of over 125 years will accelerate our growth in this space,” said Anil Ambani, chairman, Reliance Group.
“Ever since our initial investment in 2011, we have developed a mutual understanding and built more than just a financial partnership but an interactive relationship based on solid trust. This additional investment represents not only the past efforts and initiatives, but also the good relationship between both companies going forward,” said Yoshinobu Tsutsui, President, Nippon Life Insurance.
This transaction is expected to be completed within the current financial year, subject to receipt of regulatory approvals.