Nippon picks 26% stake in Reliance Mutual Fund

The deal values Reliance Asset Management at Rs. 5,600 crore, marking it the largest FDI in the Indian mutual fund industry.

Japan based Nippon Life Insurance Company today signed a Memorandum of Understanding (MoU) to acquire 26 percent stake in Reliance Capital Asset Management (RCAM). The deal is the largest FDI in the mutual fund space.

Nippon Life will invest Rs. 1,450 crore to acquire 26 percent stake in RCAM. The transaction pegs the total valuation of RCAM at approximately Rs. 5,600 crore.

“We are delighted to have Nippon as our strategic partners in the mutual fund business. They are already our partners in the life insurance business. The mutual fund partnership cements and strengthens the relationship between Reliance Group and Nippon Life further and takes it to a new level,” said Anil D. Ambani in a statement.

Reliance Mutual Fund manages Rs. 82,305.80 crore as on December 2011. Nippon Life manages Rs. 30 lakh crore. Nippon has already picked 26% stake in Reliance Life Insurance for Rs. 3,062 crore, valuing the company at Rs. 11,500 crore.

Yoshinobu Tsutsui, President, Nippon Life said “We are delighted to partner with Reliance Capital Asset Management – a leading company in India with highly talented executives, strong investment capability and nationwide distribution network. This investment is our second capital alliance with Reliance Group following the investment in Reliance Life last year. Through this investment, we believe that we can strengthen our business relationship with Reliance Group which has high reputation and reliability in India.”

Earlier, hedge fund Eton Park Capital Management had bought 5% stake in Reliance Capital for Rs. 501 crore.

Source: www.cafemutual.com

Thanks,
Gaurav Agarwal
Head Dealer
DENIP Consultants Pvt Ltd