"Nippon Life Insurance Company today signed a memorandum of understanding to acquire 26 per cent stake in Reliance Capital Asset Management (RCAM), India’s second largest and most profitable Asset Management Company (AMC).The transaction is subject to necessary regulatory approvals," a press release from the company said
The deal pegs Reliance Capital's AMC business at Rs 5,600 crore or $1.1 billion, which works out to 6.5 per cent of Reliance Mutual Fund’s assets under management (AUM). Reliance Capital has a market capitalisation of over Rs 8,000 crore.
"We are delighted to have Nippon as our strategic partners in the Mutual Fund business. They are already our partners in the Life Insurance business. The Mutual Fund partnership cements and strengthens the relationship between Reliance Group and Nippon Life further and takes it to a new level,” Anil Ambani said.
Stocks of Reliance Capital closed with over 3.5 per cent gains on the Bombay Stock Exchange today.
This is the largest investment in any Indian asset management company till date, a press release from the company said. This is the largest foreign direct investment (FDI) in the mutual fund sector, the release said.
Nippon Life is a 122-year global fortune 100 company and manages over $600 billion (Rs 30 Lakh crore) in assets, amongst the largest total assets in the world for any life insurer. The company is the seventh largest life insurer in the world and the Number one private life insurer in Asia and Japan.
RCAM the second largest AMC in India, in terms of AUM, with market share of 13 per cent and managed Rs 93,148 crore ($19 billion) as on September 30, 2011, across mutual funds, managed accounts and hedge funds.
In October 2011, Nippon Life Insurance had bought 26 per cent stake in Reliance Life Insurance for nearly Rs 3,000 crore, which was dubbed as the largest foreign direct investment in the country’s financial services sector.