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In one of the largest FDI deals in the insurance space, Reliance Life sold 26 percent stake in its insurance business to Japanese insurance conglomerate, Nippon Life Insurance Company.
The Anil Ambani controlled Reliance Life was advised by the Bombay office of Amarchand Mangaldas with Senior Partner Vandana Shroff and Partner Ravindra Bandhakavi leading the team.
The deal was signed on March 14 and is expected to close before September 30, 2011. This deal is valued at Rs. 3062 crore ($680 million) for a 26 percent stake, which values the entire company at $2.6 billion (Rs. 11,700 crore).
Nippon Life relied on Khaitan & Co along with its Japanese lawyers Anderson Mori & Tomotsune. Khaitan Partner Upendra Joshi advised Nippon Life.
This deal would be subject to necessary RBI approvals and also approvals form the regulator, Insurance Regulatory and Development Authority of India (IRDA).
Nippon Life is a 121-year-old Global Fortune 100 company. Nippon Life is Japan’s largest private insurer and sixth largest in the world with revenues of USD 72 billion and profits of USD 2.6 billion.
According to VC Circle, Life insurance penetration in India is about 4% of the gross domestic product, in terms of total premiums underwritten in a year, compared with 2.4% in China and about 13.5 percent in Britain. Industry executives say the outlook remains bright in an under-insured, booming economy that is expected to grow at 8.6% in the current fiscal year ending in March.
India opened up the insurance sector to private and foreign players in 2000. Today, 22 companies have set up operations in the life insurance segment after opening up of the sector and of these, 20 are in joint venture with foreign partners, according to IRDA website.