Japanese insurance firm Nippon Life may initiate talks with the likes of Torrent, Hinduja group and Cosmea to jointly bid for 51 per cent stake in Reliance Nippon Life Insurance under the insolvency process.
Sources told businessline that top executives from Nippon Life are expected to come to India this week to discuss potential partnership with other bidders for the insurance asset put under the block as part of Reliance Capital’s debt resolution process. Nippon LIfe already owns the balance stake of 49 per cent in the life insurance joint venture with Reliance.
Aditya Birla Sun Life is the other contender for the life insurance company, but Nippon Life is not keen on partnering with them. Sun Life Insurance is a 51:49 joint venture between the Aditya Birla Group and Canada’s Sun Life Financial Inc. If Aditya Birla Capital’s bid is approved, Reliance Nippon Life Insurance will need to be merged with Aditya Birla Sun Life Insurance as per regulatory guidelines. The merger would hugely dilute Nippon Life’s stake to below 10 per cent in the merged entity.
Countering the Aditya Birla bid
However, Nippon Life has already made it clear to the Administrator of Reliance Capital that they are a committed long-term player in the Indian life insurance business, and hence, merging with another life insurance company is not an option for them. To counter the Aditya Birla bid, Nippon Life is understood to be preparing to bid for RCAP’s 51 per cent stake in RNLIC in partnership with an Indian company, as Indian regulations restrict the holding of foreign companies in the Insurance sector at 74%.