New Delhi: Aditya Birla Capital is believed to be in discussion with Japan-based Nippon Life for merger of respective insurance ventures if the former emerges as successful bidder for life insurance venture of debt-ridden Reliance Capital Ltd, sources said.
Nippon Life, who is 49 percent partner in Reliance Nippon Life Insurance Company (RNLIC), may consider aa amalgamation between Reliance Nippon Life and Birla Sun Life Insurance, a part of Aditya Birla Capital. RNLIC is a subsidiary of Reliance Capital which is undergoing the insolvency resolution process. As per the 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 Insurance if its promoters emerge as successful bidder during resolution process of Reliance Capital. Source said, Nippon Life will face dilution of stake in the merged entity from the current 49 percent to about 15 percent based on valuation of both insurance companies. The last date for submitting binding bids for Reliance Capital Ltd and its subsidiaries is November 28. Reliance Capital had offered two options to all the bidders.
Under the first option, companies could bid for Reliance Capital Ltd, including its 8 subsidiaries or clusters. The second option gave the bidders freedom to bid for its subsidiaries individually or in a combination. Reliance Capital has eight businesses that are on the block. These include general insurance, life insurance, health insurance, securities business and asset reconstruction, among others. The Reserve Bank of India (RBI) had on November 29 last year superseded the board of Reliance Capital in view of payment defaults and serious governance issues. The RBI appointed Nageswara Rao Y as the administrator in relation to the Corporate Insolvency Resolution Process (CIRP) of the firm
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