The Telegraph
Tuesday , November 20 , 2012
Since 1st March, 1999
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Reliance Cap weighs further stake sales

Mumbai, Nov. 19: Reliance Capital Ltd is mulling plans to sell bigger stakes in its life insurance and mutual fund arms even as it has started talks to offload 26 per cent equity in its general insurance arm to a foreign partner.

In August, Reliance Capital — the financial services provider from the Anil D. Ambani group — sold a 26 per cent stake in its asset management and mutual fund arm, Reliance Capital Asset Management, to Japan’s Nippon Life for Rs 1,450 crore.

The deal was touted as the largest investment by a foreign company in the country’s mutual fund sector.

Under the terms of the agreement, Nippon will distribute Reliance Mutual Fund’s products in Japan and other Southeast Asian markets. The Reliance Capital group has also been managing Nippon funds to be invested in India.

The partnership is not limited to the asset management business alone. Last year, Nippon had picked up a 26 per cent stake in Reliance Life Insurance for Rs 3,062 crore, the largest foreign direct investment in the country’s financial services sector.

Following the strategic stake sale, Reliance Life Insurance has introduced some of the best practices followed by the Japanese financial services company. For instance, Reliance Life has launched Reliance Life Plus Club — a post-sales customer service initiative that mandates its adviser or agent to go back to the customer, with a view to maintaining a long-term relation with its policyholders.

Both these arms are now looking at the possibility of selling further stakes. Although officials from the Reliance Capital group confirmed that such an option was open, they did not comment on whether another stake sale was being planned to raise more capital.

Sam Ghosh, CEO of Reliance Capital, told PTI that the group was open to the idea of selling further stake in its Reliance Life and Reliance Capital Asset Management Company at an appropriate time. He said the understanding with Nippon Life was “open-ended”.

At present, foreign investment is capped at 26 per cent in the insurance business in India.