Mumbai: Seven months after announcing a 26 per cent stake sale in Reliance Life Insurance to Nippon Life for a consideration of Rs 3,062 crore ($680 million), Reliance Capital completed the transaction on Sunday. This makes the deal the largest foreign direct investment (FDI) in the Indian financial services sector.
Reliance Capital said it received the entire transaction proceeds of Rs 3,062 crore from Nippon Life.
The deal had got the go-ahead from insurance regulator Irda and the Reserve Bank of India in September. Reliance Capital completed the stake sale before the completion of ten years of business. In August, the Finance Ministry issued a circular saying that Indian promoters of insurance companies will not have to wait for completion of 10 years in business to be able to divest their holding.
The transaction pegs the total valuation of Reliance Life Insurance at approximately Rs 11,500 crore ($2.6 billion).
Commenting on the development, Reliance Capital CEO Sam Ghosh said that Nippon was coming on board as a valued strategic partner in Reliance Life Insurance.
“Nippon’s vast experience of over 122 years will help strengthen Reliance Life Insurance’s position as a leading and world class insurance company in India,” said Sam Ghosh, CEO, Reliance Capital.
Nippon Life, also known as Nissay, is the seventh-largest life insurer in the world and the largest private life insurer in Asia and Japan.
It posted revenues of Rs 3,49,834 crore and a profit of Rs 12,199 crore for the fiscal year ended March 31, 2011.
Reliance Life started operations in 2005 after the acquisition of a life insurance company by Reliance Group.