Under the insolvency process, Japanese insurance firm Nippon Life may begin talks with Torrent, Hinduja Group, and Cosmea to jointly bid for a 51% stake in Reliance Nippon Life Insurance.
According to sources, top executives from Nippon Life are expected to visit India this week to discuss potential collaboration with other bidders for the insurance asset put up for auction as part of Reliance Capital’s debt resolution process. Nippon Life already has a 49 percent stake in the life insurance joint venture with Reliance.
The other contender for the life insurance company is Aditya Birla Sun Life, but Nippon Life is not interested in partnering with them. Sun Life Insurance is a 51:49 partnership between the Aditya Birla Group and Sun Life Financial Inc. of Canada. If Aditya Birla Capital’s bid is accepted, Reliance Nippon Life Insurance will be merged with Aditya Birla Sun Life Insurance in accordance with regulatory requirements. The merger would significantly reduce Nippon Life’s stake in the merged entity to less than 10%.
Responding to Aditya Birla’s bid
However, Nippon Life has already informed Reliance Capital’s Administrator that they are a committed long-term player in the Indian life insurance business and that merging with another life insurance company is not an option. To counter the Aditya Birla bid, Nippon Life is said to be preparing a bid for RCAP’s 51% stake in RNLIC in collaboration with an Indian company, as Indian regulations limit foreign companies’ holdings in the insurance sector to 74%.
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