Ahmedabad-based Torrent group is planning to make an offer for Reliance Nippon Life Insurance Company (RNLIC), a 51:49 joint venture between Reliance Capital (RCap) and Nippon Life of Japan.
Reliance Capital is undergoing a bankruptcy process and the administrator had sought offers for the entire company and for its various business clusters. During the process, no offers were received for the life insurance business even as the lenders received indicative offers for the entire company and for various other companies owned by Reliance Capital.
Bankers close to the deal said a valuer appointed by the administrator for the life insurance business pegged the embedded value of the company at Rs 5,800 crore. Based on this valuation, Torrent is planning to make an investment of Rs 2,900 crore to acquire 51 per cent in the RNLIC, a source said.
When contacted, a Torrent spokesperson declined to comment.
If successful, the investment will mark the entry of Ahmedabad-based Torrent Group into the financial services business, which already has a presence in the power, city gas distribution, and pharmaceuticals businesses.
In August, the committee of creditors (CoC) had received six bids for Reliance Capital as an entire company. The bidders included Torrent group, IndusInd International, Oaktree, Cosmea Financial, Authum Investment, and B-Right Real Estate. These companies had submitted indicative bids in the range of Rs 4,000 crore to Rs 4,500 crore for Reliance Capital. These offers were subject to completion of due diligence.
For the profit-making Reliance General Insurance business, Piramal Finance had bid Rs 4,000 crore, while Zurich Insurance’s offer was Rs 3,500 crore. Advent, a private equity firm, had made the highest bid of Rs 7,000 crore for Reliance General Insurance. These bidders then sought time till early next year to make a binding bid citing delay in due diligence.
The lenders, however, gave time only till October end to make the binding offer. According to the earlier timeline, the last date for submission of binding bids was September 29 along with a deposit of Rs 75 crore.
Reliance Nippon is amongst the leading private sector life insurers with a private sector market share of 1.1 per cent, in terms of new business premium, according to Reliance Capital annual report. The total premium for the 2021-22 financial year stood at Rs 5,037 crore against Rs 4,736 crore reported in the previous year.
Reliance Capital was sent for debt resolution in December last year after it defaulted on bank loans. Lenders are hopeful they will be able to resolve the combined debt of RCap and its subsidiaries worth Rs 50,333 crore by the end of the current financial year (2022-23).