Aditya Birla Capital joins race to acquire life insurer Reliance Nippon

Aditya Birla Capital, the financial services firm of the Aditya Birla group, has joined the race to buy a 51 per cent stake in Reliance Nippon Life Insurance Company (RNLIC), a unit of bankrupt Reliance Capital. Ahmedabad-based Torrent Group is also in the fray.

The stake is being sold by an administrator appointed by the Reserve Bank of India (RBI). A valuer appointed by the administrator has pegged the embedded value of the life insurance company at Rs 5,800 crore, said a banker close to the transaction.

Reliance Capital holds 51 per cent stake in RNLIC and Nippon Life of Japan the rest. Aditya Birla Capital separately owns a majority stake in Aditya Birla Sun Life Insurance Company, a joint venture with Canada’s Sun Life.

Aditya Birla Sun Life Insurance had 1.88 per cent market share in terms of new business premium as of September, while RNLIC had 0.27 per cent share, according to the Insurance Regulatory and Development Authority.

RNLIC was the only Reliance Capital subsidiary that did not receive any bid when the deadline for non-binding bid submission ended on August 29, while the other businesses received 14 non-binding bids.

An Aditya Birla Capital spokesperson did not comment on the matter.

If successful, the investment will also mark the entry of Torrent into the financial services business. It already has a presence in power, city gas distribution, and pharmaceuticals.

Other offers

In August, the committee of creditors (CoC) received six bids for Reliance Capital. The bidders included Torrent, IndusInd International, Oaktree, Cosmea Financial, Authum Investment, and B-Right Real Estate. The companies submitted indicative bids in the range of Rs 4,000 crore to Rs 4,500 crore. The offers were subject to due diligence.

For profit-making Reliance General Insurance, Piramal group bid Rs 4,000 crore and Zurich Insurance Rs 3,500 crore. However, Advent, a private equity firm, made the highest bid of Rs 7,000 crore. Now, Piramal and Zurich are in talks to make a joint bid for the firm. They had sought time till early next year to make a binding bid, citing the delay in due diligence, but were asked to make offers by October end.

According to the earlier timeline, the last date for submitting the binding bids was September 29, along with a deposit of Rs 75 crore. RNLIC’s total premium for financial year 2021-22 stood at Rs 5,037 crore, against Rs 4,736 crore reported the previous year.

Reliance Capital was sent for debt resolution last December after it defaulted on bank loans. Lenders hope they will be able to resolve the combined debt of the company and its subsidiaries worth Rs 50,333 crore by the end of the current financial year (2022-23).

The last date for submitting binding bids is October 31.