Nippon Life Insurance Company on Thursday signed a memorandum of understanding (MoU) to acquire 26 per cent stake in Reliance Capital Asset Management (RCAM), India's second largest asset management company (AMC).

The MoU was signed by Anil D. Ambani, Chairman, Reliance Capital, and Yoshinobu Tsutsui, President, Nippon Life, here.

Nippon Life will invest in the aggregate Rs.1,450 crore ($290 million) to acquire 26 per cent strategic stake in RCAM. The transaction pegs the total valuation of RCAM at about Rs.5,600 crore ($1.1 billion). Nippon Life is a 122-year Global Fortune 100 company, and manages over $600 billion (Rs.30-lakh crore) in assets, among the largest total assets in the world for any life insurer.

The company is the seventh largest life insurer in the world and number one private life insurer in Asia and Japan.

Strategic partner

Commenting on the development, Anil D. Ambani said, “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.”

Mr. Tsutsui said, “We are delighted to partner Reliance Capital Asset Management, a leading company in India with highly talented executives, strong investment capability and nationwide distribution networks. This investment is our second capital alliance with Reliance Group following the investment in Reliance Life last year.

Through this investment, we believe that we can strengthen our business relationship with the Reliance Group which has high reputation and reliability in India.”

RCAM, in terms of assets under management with a market share of 13 per cent, managed Rs.93,148 crore ($19 billion) as on September 30, 2011, across mutual funds, managed accounts and hedge funds.

Nippon Life Insurance is already a strategic partner in Reliance Life Insurance. The Japanese company acquired 26 per cent stake in Reliance Life Insurance at an aggregate value of Rs.3,062 crore ($680 million). The transaction pegged the total valuation of Reliance Life Insurance at about Rs.11,500 crore ($2.6 billion).

Nippon Life Insurance, also called Nissay, is Japan's largest private life insurer with revenues of Rs.3,49,834 crore ($80 billion) and profits of over Rs.12,199 crore ($3 billion).

Range of products

The company, which has over 14 million policies in Japan, offers a wide range of products, including individual and group life and annuity policies, through various distribution channels and mainly uses a face-to-face sales channel for its traditional insurance products.

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