Nippon Life gets FIPB nod to hike stake in Reliance Life

Will be investing an aggregate value of Rs 2,265 cr to acquire additional 23% stake

Foreign Investment Promotion Board (FIPB) has granted approval to Nippon Life Insurance for increasing its stake in Reliance Life Insurance (RLI), a part of Reliance Capital, to 49%. Nippon Life Insurance has already secured approval from Competition Commission of India (CCI) and the transaction is now expected to be completed in the next few days.

In a statement, the company said that Nippon Life Insurance will be investing an aggregate value of Rs 2,265 crore ($348 million) to acquire an additional 23% stake in Reliance Life Insurance to reach a 49% stake.

In line with the new shareholding structure, the name of the company will also be changed to Reliance Nippon Life Insurance Company, post increase in stake. The transaction pegs Reliance Life Insurance's valuation at approx. Rs 10,000 crore ($1.5 billion), amongst the highest valuation for any Life Insurance company in the country.

"Nippon Life Insurance investment in Reliance Life Insurance represents implied Embedded Value multiple of over 3 times, the highest in the industry till date," said Reliance Life in a statement. Nippon Life Insurance would have invested a total of Rs 8,630 crore ($1.3 billion) for acquiring 49% each in Reliance Life Insurance and Reliance Capital Asset Management with this transaction.