Aditya Birla Capital joins the race to acquire life insurer Reliance Nippon Life
Aditya Birla Capital Ltd has joined the race to pick up stake in Reliance Nippon Life Insurance Company, a subsidiary of Anil Ambani headed debt-ridden Reliance Capital which is undergoing an insolvency resolution process. The financial services arm of the Aditya Birla Group has expressed intent to pick up a 51 percent stake of Reliance Capital in Reliance Nippon Life Insurance Company (RNLIC), said media reports. Reliance Nippon Life Insurance is a 51:49 joint venture between Reliance Capital and Nippon Life of Japan.
Reliance Nippon Life Insurance was the only subsidiary of Reliance Capital that had not received any bid when the deadline for submission of non-binding bids had ended on August 29. Reliance Capital Ltd (RCL) received 14 non-binding bids for its multiple businesses. Six companies had submitted bids for the entire company, while the rest of the bidders had submitted offers for its multiple subsidiaries. The last date for submitting the binding bids is October 31.
Two options are available for the bidders. Under the first, bidders are required to submit bids for the entire RCL and in the second one, they have the choice to bid for specific verticals of the company. Apart from Aditya Birla Capital, Torrent Group has partnered with Nippon Life Insurance to bid for Reliance Capital’s 51 percent stake in Reliance Nippon Life Insurance Company as part of the resolution process under the Insolvency and Bankruptcy Code (IBC).
A valuer appointed by the administrator has pegged the embedded value of the life insurance company at Rs.5,800 crore. The Reserve Bank of India (RBI) had on November 29 last year superseded the board of RCL in view of payment defaults and serious governance issues.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.
This is the third large non-banking financial company (NBFC) against which the central bank has initiated bankruptcy proceedings under IBC. The other two were Srei Group NBFC and Dewan Housing Finance Corporation (DHFL). The RBI subsequently filed an application for initiation of CIRP against the company at the Mumbai bench of the National Company Law Tribunal (NCLT). In February this year, the RBI-appointed administrator invited expressions of interest for the sale of Reliance Capital.
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