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Nippon Life gets FIPB approval to increase state in Reliance Life

| | Mar 21, 2016, at 09:06 pm
#Reliance Life # Reliance # Foreign Investment Promotion Board
Mumbai, Mar 21 (IBNS) The Foreign Investment Promotion Board (FIPB) has granted approval on Monday to Nippon Life Insurance (NLI), a Fortune 500 company and one of the largest life insurers in the world, for increasing its stake in Reliance Life Insurance (RLI), a part of Reliance Capital, to 49 per cent.
Based on the recommendations of Foreign Investment Promotion Board (FIPB) in its meeting held on March 7, 2016, the central Government has approved 15 Foreign Direct Investment (FDI) proposals involving FDI of Rs. 7261.6 crore. 
 
Nippon Life Insurance has already secured approval from Competition Commission of India (CCI) and the transaction is now expected to be completed in the next few days. 
 
Nippon Life Insurance will be investing an aggregate value of Rs 2,265 crore (US$ 348 million) to acquire an additional 23 per cent stake in Reliance Life Insurance to reach a 49 per cent stake. 
 
In line with the new shareholding structure, the name of the company will also be changed to Reliance Nippon Life Insurance Company, post increase in stake. 
 
The transaction pegs Reliance Life Insurance’s valuation at approx. Rs 10,000 crore (US$ 1.5 billion), amongst the highest valuation for any Life Insurance company in the country, according to the company.
 
Nippon Life Insurance investment in Reliance Life Insurance represents implied Embedded Value multiple of over 3 times, the highest in the industry till date.
 
Nippon Life Insurance would have invested a total of Rs 8,630 crore (US$ 1.3 billion) for acquiring 49 per cent each in Reliance Life Insurance and Reliance Capital Asset Management with this transaction.
 
Reliance Life Insurance is among the leading private sector life insurance companies, in terms of new business premium, according to the company.
 
The company recorded a new business premium of Rs 285 crore (US$ 43 million), renewal premium of Rs 706 crore (US$ 107 million), total premium (net of reinsurance) of Rs 986 crore (US$ 149 million) and total funds under management of Rs 16,038 crore (US$ 2.4 billion) for the quarter ended December 31, 2015.
 
Nippon Life Insurance is an over 125 years old insurer and a Global Fortune 500 company that manages over US$ 520 billion (Rs 33.8 Lakh crore) in assets - among the largest total assets in the world for any life insurer. The company is one of the largest life insurers in the world.

 

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