In the biggest ever FDI in Indian mutual fund industry, Japanese giant Nippon Life today acquired 14 per cent additional stake in leading fund house Reliance Capital Asset Management Company for Rs 1,196 crore, hiking its stake to 49 per cent.
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 USD 1.3 billion.
Nippon Life Insurance (NLI), which holds 35 per cent stake in RCAM at present, today signed definitive agreements to increase its stake to 49 per cent in the Reliance Group company, RCAM said in a statement.
The Boards of Directors of both NLI and RCAM have approved the increase in stake by the Japanese partner.
“Both Reliance Capital and Nippon Life Insurance have enjoyed an extraordinary relationship in the last few years and we see this mutual respect and commitment growing stronger with time. Together we are determined to grow our businesses multi-fold and have stronger footprint in India and abroad,” said Ambani, the Chairman of Reliance Group.
The Japanese company will invest an aggregate value of Rs 1,196 crore (USD 184 million) to acquire an additional 14 per cent stake in RCAM, in tranches, to reach a 49 per cent stake.
The transaction pegs RCAM’s valuation at Rs 8,542 crore (USD 1.3 billion), the highest valuation till date for any asset management company in the country, the statement claimed.
“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.
In line with the new shareholding structure, the name of the company will also be changed from Reliance Capital Asset Management to Reliance Nippon Life Asset Management.
Nippon Life had acquired 26 per cent 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 per cent, to 35 per cent, 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 (USD 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.