Resolution may be near for the insurance assets of Reliance Capital. Highly placed sources indicate that Birla Sun Life Insurance and Reliance Nippon Life Insurance Company are considering a merger.

Birla Sun Life is expected to acquire the 51 per cent stake held by Reliance Capital in its life insurance venture and this will pave way for the Aditya Birla group and Nippon to join hands for life insurance business. Post the merger, Aditya Birla group will hold 51 per cent stake, while Nippon will remain invested at 49 per cent. The deal is expected to conclude at around ₹2,500-2,800 crore, with Reliance Capital’s stake likely to be valued at 2-2.3x FY22 price to embedded value.

Boosting market share

Birla Sun Life was the late entrant in the bidding process for Reliance Capital’s assets and the merger is set to help Birla’s market share in the industry grow from 1.9 per cent as on September 30, 2022, to 2.3 per cent, well ahead of Max Life Insurance, Kotak Mahindra Life and Tata AIG Life.

It is also learnt that Canada-based Sun Life, which is currently a 26 per cent joint venture partner in Birla Sun Life Insurance, may terminate its association with the Aditya Birla group for life insurance business. “The regulator may not allow two foreign JV partners to invest in a life insurance company in India and hence, Sun Life may exit the insurance operations with the group,” said a person aware of the matter.

E-mail sent to Aditya Birla Capital, the holding company of Birla Sun Life Insurance and the key entity working on the deal, and Reliance Nippon Life Insurance remained unanswered till press time.

Torrent group, IndusInd International, Oaktree, Cosmea Financial, Authum Investment, B-Right Real Estate and Piramal Capital are among the other bidders for assets of Reliance Capital.