Talks between Aditya Birla Capital and Japan-based Nippon Life for a merger failed with the latter not agreeing to a reduced stake in the life insurance venture of debt-ridden Reliance Capital post resolution, sources said.

Nippon Life, the 49 per cent partner in Reliance Nippon Life Insurance Company (RNLIC), was considering a merger between Reliance Nippon Life and Birla Sun Life Insurance, a part of Aditya Birla Capital.

RNLIC is a subsidiary of debt-ridden Reliance Capital, which is undergoing the insolvency resolution process.

Sources said the Nippon Life stake would have been diluted to under 10 per cent post the merger. The Japanese firm is believed to be not comfortable with the idea of losing all the shareholder and governance rights.

According to IRDAI guidelines, an entity cannot float two life or non-life insurance entities. Thus, it would be mandatory for Birla Sun Life to merge with Reliance Nippon Life if its promoter emerges a successful bidder for RCap.

Aditya Birla Capital did not respond to the query sent by PTI in this regard. The last date for submitting binding bids for Reliance Capital and its subsidiaries is November 28.

Two bidding options

RCap had offered two options to the bidders. Under the first, companies could bid for RCap, including its eight subsidiaries. The second option gave the bidders freedom to bid for RCap subsidiaries individually or in a combination.

RCap has eight businesses that are on the block. These include general insurance, life insurance, health insurance, securities business and asset reconstruction.

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