The top brass of Japan’s Nippon Life Insurance Company is visiting India this week to flag its concerns regarding the ongoing insolvency process of Reliance Capital with authorities, said sources.
In addition, the top management is also expected to hold talks with various interested Indian companies to make a counter bid for the Reliance Nippon Life Insurance Company (RNLIC). Since foreign companies are not allowed to hold more than 74% in an insurance entity, Nippon has to form a consortium with Indian company to bid for the rest 51% of RNLIC.
The Japanese company’s president Hiroshi Shimizu would be accompanied by Managing Executive Officer and Head of Global Business, Nippon Life Insurance, Minoru Kimura. Nippon Life Asia Pacific and director of RNLIC Regional CEO Tomohiro Yao would also be part of the team, sources close to the development said.
The top management’s visit comes at a time after Nippon’s and Aditya Birla Capital merger talks failed to make any headway. There were fears that Nippon’s stake would have fallen to less than 10% after the merger.
Their visit also coincides with the deadline to submit the final binding bids for Reliance Capital and its subsidiaries, including RNLIC, which ends on Monday.
A number of bidders have sought extension to the deadline.
The top team is also scheduled to meet RBI officials and stakeholders in Reliance Capital to apprise them of their position on Nippon Life’s investment in RNLIC. Earlier, Nippon Life was in talks with Torrent Group, Cosmea Financial and Hinduja Group to form a strategic partnership to bid for RNLIC.
Aditya Birla Sun Life (ABSL) and Nippon Life were also in talks to jointly bid for RNLIC, which failed due to the differences on multiple issues.
Nippon Life had also informed Reliance Capital’s administrator that it was not interested in merging with ABSL to acquire the remaining stake in RNLIC. At present, Indian insurance rules do not permit a foreign entity to hold more than 74% stake in an Indian insurance firm, it had added.
Separately, a Swiss Challenge process initiated by the Life Insurance Corporation of India (LIC) for the Rs 3,400-crore debt owed by Reliance Capital has failed to elicit any interest. IDBI Trusteeship, the process advisor running the Swiss Challenge process on behalf of LIC, did not get a single bid as the deadline ended on Friday, sources close to the development said.
Earlier, before the initiation of the Swiss Challenge, LIC had received a binding bid of 27 cents for each dollar from Assets Care & Reconstruction Enterprise (ACRE), an asset reconstruction company backed by Ares SSG Capital, Singapore. Accepting this would have resulted in a 73% haircut for LIC.
Based on ACRE’s offer for LIC debt, Reliance Capital as a Core Investment Company would be valued at about Rs 4,400 crore.
Both LIC and ACRE are members of Reliance Capital’s CoC and their attempt to finalise a transaction close to the binding bids submission deadline had upset other bidders.
Earlier, Reliance Capital’s lenders and bidders had objected to LIC’s plans to sell its debt, which was investments through bonds in the former Anil Ambani group company, alleging ‘conflict of interest’.