Nippon Life Insurance of Japan said on Thursday it has signed binding definitive agreements with Reliance Capital to increase its stake in Reliance Nippon Life Asset Management (RNAM) to 75 per cent.
Both partners currently hold 42.88 per cent each in the company, while the rest is with public shareholders.
Reliance Capital will exit its entire RNAM shareholding to Nippon Life Insurance, and Offer For Sale to other financial investors to ensure the minimum free float requirement of 25 per cent is also met.
Nippon will make the mandatory open offer at Rs 230 per share, in accordance with the SEBI Takeover Regulations. The open offer price represents a premium of 15.5 per cent to the minimum 60-day price as determined under the SEBI Takeover Regulations.
"Nippon Life views its India employees and the management team of the asset management business led by Sundeep Sikka as its joint partner in India," said Yutaka Ideguchi, Director and Managing Executive Officer of Nippon Life Insurance.
"They have contributed significantly for the successful track record of business over the years. As existing shareholders, we are very confident that the current management team will continue to take this journey forward which started many years back," he said in a statement.
Nippon Life Insurance had made initial investment in RNAM in 2012. The company will continue to run its operations without any change in structure and management.
"I am delighted that Nippon Life Insurance has chosen to increase its holding in the company. They have been very supportive shareholders and this transaction will ensure continuity in strategy," said Sundeep Sikka, CEO and Executive Director of RNAM.
"I am confident that we will continue to benefit from Nippon Life's leading practices in risk management and leverage its global network to significantly enhance capital inflows into India," he said.
Nippon Life's total investment in RNAM will be over Rs 7,800 crore and over Rs 5,000 crore in Reliance Nippon Life Insurance Co Ltd, cumulatively adding up to over Rs 12,800 crore, among the largest FDI investments into India in the financial services sector.
Nippon Life Insurance, a 130-year old company, is one of the largest life insurance companies in Japan and manages assets of over 700 billion dollars. Total assets managed by it are twice the size of Indian mutual funds industry.