Japan’s Nippon Life has no plans to exit Reliance Nippon Life Insurance Company (RNLIC) by selling its 49% stake, or merging with another life insurance company, as part of the ongoing bankruptcy process.
The company is also scouting for a strategic partner who would acquire RCap’s 51% stake in the RNLIC, a group company of beleaguered Reliance Capital (RCap). Together with the strategic partner, the company intends to run RNLIC’s business for a long-term, sources close to the development said, quoting a letter sent by Nippon Life. The letter was sent to RCap’s insolvency administrator after its committee of creditors (CoC) approved a proposal by Aditya Birla Capital to bid for RNLIC, a firm that did not receive any bid during the ongoing insolvency process.
The approvals were accorded following the CoC meeting held last week. Aditya Birla Capital already has presence in insurance sector through subsidiaries. According to sources, Nippon Life does not want another insurance company to acquire RCap’s stake, which would mean it would become a minority partner.
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In case Aditya Birla Capital wins the bid to acquire RCap’s 51% stake in RNLIC, it will have to merge the acquired company into its own insurance venture. This will make Nippon Life a minority partner in the merged entity. As per the present Insurance Regulatory and Development Authority guidelines, a company cannot hold stakes in two life insurance companies at the same time.
Apart from Aditya Birla Capital, Gujarat-based Torrent Group has partnered with Nippon Life Insurance to bid for RCap’s stake in RNLIC as per the Insolvency and Bankruptcy Code (IBC). If successful, this would mark Torrent Group’s – which has presence in pharmaceuticals, power and city gas distribution – foray into the financial services business.
Earlier, a valuer appointed by the administrator for RCap’s insolvency proceedings, had pegged the embedded value of the life insurance company at Rs 5,800 crore.
Reliance Nippon Life Insurance, an RCap group company, was put under option-2, while the remaining assets of were put under option-1. While RNLIC did not get any bid during the earlier rounds of bidding, the remaining businesses of RCap got 14 non-binding bids.