The race to acquire Reliance Capital’s 51 per cent stake in Reliance Nippon Life Insurance Co (RNLIC) is heating up, with senior management from the joint venture’s Japanese partner expected to visit India this week to express concerns over the ongoing wind-down process to bring under bankruptcy laws, sources said.
Japanese company Nippon Life, which holds a 49 percent stake in RNLIC, is opposed to Aditya Birla Sun Life entering the race to acquire Reliance Capital’s stake in RNLIC.
Sources with knowledge of the matter said that Hiroshi Shimizu, Global President of Nippon Life, along with Minoru Kimura, Managing Executive Officer and Head of Global Business, Nippon Life Insurance, and Tomohiro Yao, Regional CEO, Nippon Life Asia Pacific and Director, RNLIC who probably will Visit Mumbai on Monday.
Shimizu and his team may meet senior Reserve Bank of India (RBI) officials and other stakeholders and brief them on their position on their investment in RNLIC and their long-term commitment to the Indian insurance sector.
The visit coincides with the deadline for the submission of definitive binding offers for Reliance Capital and its subsidiaries, including RNLIC.
Sources said Nippon Life had already made it clear to Y Nageshwar Rao, Reliance Capital’s liquidator, that the company was opposed to Aditya Birla Sun Life entering RNLIC’s bidding process.
It does not want to merge with Birla Sun Life or sell its 49 percent stake in the Indian company, sources said, adding Nippon has emphasized that they are a committed long-term player in the Indian life insurance business and therefore merging with another life insurance company is for they are not an option.
Nippon Life has also made its position clear to the top management of Aditya Birla Sun Life and its overseas partner Sun Life Financial Inc.
To counter Aditya Birla’s bid, Nippon Life is also preparing to bid in partnership with an Indian company for Reliance Capital’s 51 percent stake in RNLIC, as Indian regulations limit foreign company ownership in the insurance sector to 74 percent .
Sources said Nippon is in talks with Torrent, Cosmea and Hinduja to form a strategic partnership for this offering.
Aditya Birla is very interested in making an offer for RNLIC. No bids were received in the first round for Reliance Capital’s 51 percent stake. Reliance Capital is sold to collect unpaid bank charges.
Nippon Life, which already owns 49 percent of RNLIC, is keen to acquire this 51 percent stake together with a strategic investor. Nippon had held several meetings with Reliance Capital’s administrator and briefed him on his plans.
But the sudden entry of Aditya Birla Sun Life Insurance has thrown the company and its plans into disarray.
If Birla Sun Life succeeds in acquiring the 51 per cent stake in RNLIC, it will have to merge RNLIC with its existing insurance company – Birla Sun Life Insurance – as IRDA guidelines do not allow for cross-shareholdings between two insurance companies.
The merger would hugely dilute Nippon Life’s interest in the merged entity to under 10 percent. It would also lose all shareholder and governance rights in relation to the nomination of the CEO, equal representation on the Board of Directors, member of the Audit Committee and veto power in the reserved matters at RNLIC.
This story was published from a wire agency feed with no changes to the text.
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