Aditya Birla Capital, Nippon Life merger discussions fail


The merger discussion between Aditya Birla Capital and Japan-based Nippon Life has likely failed. It is said that Nippon Life who owns a 49% stake in Reliance Capital-backed life insurance venture, Reliance Nippon has refused to reduce its stake. The Anil Ambani-backed Reliance Capital along with its subsidiaries are currently undergoing insolvency resolution.

As per the PTI report, sources said that Nippon Life stake would have been diluted to below 10% following the merger and the Japanese firm is believed to be not comfortable with the idea of losing all the shareholders and the governance rights.

Nippon Life was considering a merger between Reliance Nippon Life with Aditya Birla Capital-backed Birla Sun Life Insurance.

Also, the report cited that as per the IRDAI guidelines, an entity cannot float two life or non-life insurance entities. Thereby, it would be mandatory for Birla Sun Life to merge with Reliance Nippon Life Insurance if its promoters emerge as successful bidders during the resolution process of RCL.

However, Aditya Birla did not respond to the query sent by PTI over the matter.

The deadline for submitting bids including the resolution plan for Reliance Capital and its subsidiaries is currently set at November 28. However, the due date for submitting bids has been extended on multiple occasions.

Reliance Capital has a consolidated debt of about Rs40,000 crore. RBI had applied to initiate CIRP against the Reliance Group company at the National Company Law Tribunal (NCLT) Mumbai bench.

Among subsidiaries of Reliance Capital that are pushed for insolvency proceedings are – Reliance General Insurance, Reliance Nippon Life Insurance, Reliance Securities, Reliance Asset Reconstruction Company, Reliance Home Finance, and Reliance Commercial Finance.

The central bank had appointed Nageswara Rao Y as the administrator of Reliance Capital’s insolvency process.

Earlier, Reliance Capital lenders had given only two options to the bidders. Firstly, bidders were allowed to acquire Reliance Capital along with its eight subsidiaries. Reliance Capital will become the Core Investment Company here. Secondly, bidders can also submit resolution plans even for a single subsidiary.

On Monday, Reliance Capital shares closed at 11.80 apiece up by 4.98% on BSE. Aditya Birla Capital ended at 130.40 apiece higher by 1.48%.

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