Japan-based Nippon Life Insurance Company has entered into a definitive agreement to acquire Reliance Capital’s stake in Reliance Nippon Life Asset Management (RNAM).
Reliance Capital and Nippon Life Insurance both own 42.88% stake each in Reliance Nippon.
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Under the terms of the agreement, the Japanese insurer will acquire Reliance Capital’s 32.125% stake in the joint venture for INR45.2bn (approximately $649m).
The deal will increase Nippon Life Insurance’s stake in RNAM to 75%.
Reliance Capital will sell its remaining stake in the joint venture.
Besides, Nippon Life will make an open offer to the public shareholders of RNAM at INR230 per share.
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By GlobalDataBy selling its stake, Reliance Capital is expected to receive proceeds of nearly INR60bn ($860m). The money will be used by the company cut down its outstanding debt by 33%.
Reliance Group chairman Anil Ambani said: “The monetisation of the RNAM stake is part of our value unlocking strategy.
“We expect this transaction, together with other deals underway, to substantially reduce Reliance Capital’s debt by over 50% in the current financial year.”
Nippon first acquired a 26% stake in the Indian asset manager in 2012 for $290m. The deal valued the company at approximately $920m.
The Japanese insurer acquired an additional 9% stake in 2014 and a further 14% the next year.
Upon closing of the deal, Reliance Nippon Life Asset Management will become a subsidiary of Nippon Life.
