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Reliance Capital gains as Nippon Life Insurance hikes stake in asset management arm

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Reliance Capital surged 4.56% to Rs 503 at 13:09 IST on BSE after the company said Nippon Life Insurance has agreed to increase its stake in Reliance Capital Asset Management to 49% from the existing 26% in two or more tranches.

The announcement was made during market hours today, 26 November 2014.

Meanwhile, the S&P BSE Sensex was down 12.22 points or 0.04% at 28,350.27.

On BSE, so far 6.57 lakh shares were traded in the counter as against average daily volume of 5.51 lakh shares in the past one quarter.

The stock hit a high of Rs 503.80 and a low of Rs 478 so far during the day. The stock had hit a 52-week high of Rs 668.40 on 9 June 2014. The stock had hit a 52-week low of Rs 304.55 on 28 February 2014.

Reliance Capital Asset Management (RCAM) is part of Reliance Capital. Nippon Life Insurance will be investing an aggregate value of Rs 657 crore ($108 million) to acquire an additional stake of 9% in RCAM in the first tranche, to reach a 35% stake. The transaction pegs RCAM’s valuation at Rs 7300 crore ($1.2 billion), the highest valuation till date for any asset management company in the country, the statement said. This transaction is expected to be completed within the current financial year, subject to receipt of regulatory approvals. Subsequently, Nippon Life Insurance will have an option to increase its stake further by an additional 14% to reach 49%, in tranches.

Mr. Sam Ghosh, CEO, Reliance Capital said, “We welcome Nippon’s decision to further strengthen this partnership and acquire an additional stake in our asset management company. We strongly believe their expanded role in the company will accelerate our growth, reach and performance”.

On consolidated basis, Reliance Capital’s net profit rose 19.9% to Rs 217 crore on 11.5% growth in total income to Rs 2084 crore in Q2 September 2014 over Q2 September 2013.

Reliance Capital is a part of the Reliance Anil Dhirubhai Ambani Group and is a financial services companies in the private sector.

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