Mumbai: In the largest such deal in Indian insurance space, the Reliance Anil Dhirubhai Ambani Group on Monday said it has roped in Nippon, the sixth largest in the business globally, for a 26 per cent stake in a group company for $680 million.
"Nippon Life Insurance will invest an aggregate value of Rs.3,062 crore ($680 million) to acquire a 26-per cent strategic stake in Reliance Life Insurance," the Anil Ambani group said in a statement.
"This transaction pegs the total valuation of Reliance Life at Rs 11,500 crore ($2.6 billion)," the group said, adding: "Nippon Life is a 121-year-old Fortune 100 company, 6th largest life insurer in the world and No.1 private life insurer in Asia and Japan."
The news made during the trading hours of Indian bourses sent the stocks of Reliance Capital, the holding company of Reliance Life Insurance, soaring nearly 6.5 per cent to Rs 544.25 on the Bombay Stock Exchange (BSE).
Group chairman Anil Ambani did not make any direct comment on the deal but expressed his concern and sympathy over loss of life and property in Japan due to Friday's earthquake and the tsunami and aftershocks thereafter.
"We pray for strength to the country, its people and our new partners in the entire Nippon Life family, to overcome the trauma of the tragic loss of life and devastation caused by this calamity," he said.
Sam Ghosh, chief executive of Reliance Capital, hoped the alliance would bring Nippon's experience, expertise and best practices in areas of product launch, underwriting, and distribution, customer relationship and risk management.
"This partnership will accelerate Reliance Life Insurance's vision of becoming a world class insurance company in India," he said. "This is the largest foreign direct investment in the Indian financial services sector and the largest in the insurance sector."
According to available data, Nippon Life posted revenues of $72 billion and a profit of $2.6 billion during fiscal year ended March 31, 2010. It sold some 1.4 million policies during the year, taking the total number of policies in force to over 14.7 million.
Reliance Life had an aggregate business premium of $1.46 billion as on March 31, 2010. It has sold over seven million policies and manages assets of over $3.7 billion. The group as a whole had total assets of over $39 billion and net worth of $19 billion.
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