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Amarchand, Khaitan: $680m record FDI in Reliance by Nippon Life

Amarchand Mangaldas, Khaitan & Co and Japanese law firm Anderson Mori & Tomotsune have advised on Asia’s largest life insurance company Nippon Life Insurance Co buying $680m (Rs 3,062 crore) or 26 per cent in Reliance Insurance, marking it the largest ever foreign direct investment (FDI) in the Indian insurance sector.

Amarchand Mangaldas led by Mumbai-based senior partner Vandana Shroff and partner Ravindra Bandhakavi advised Reliance Life Insurance, which is a fully-owned insurance arm of Anil Ambani group’s Reliance Capital.

Khaitan & Co partner Upendra Joshi, assisted by Zakir Merchant and Tarunaya Krishnan, acted for Nippon Life Insurance Company.

Japanese firm Anderson Mori & Tomotsune with associates Kiyoko Yagami and Ryo Kotoura advised the buyer on Japanese law.

The Singapore branch of Deutsche Bank and Deutsche Equities in Mumbai were the bankers for Reliance Insurance and Tokyo-based financial advisor Mitsubishi UFJ Morgan Stanley Securities advised .

The deal was signed on 14 March and is expected to close by 30 September, subject to necessary approvals of the Insurance Regulatory and Development Authority of India (IRDA) and the Reserve Bank of India (RBI).

Khaitan & Co said in a press release that the deal completed in a record timeframe of four months, including intensive due diligence and a fast-paced documentation process, closing on target despite the Japan tsunami tragedy of 11 March.

The Mint reported: “Nippon Life Insurance posted revenue of Rs 3,24 trillion and profit of Rs 11,700 crore for the fiscal year ended 31 March. The company sold around 1.4 million policies, taking the total number of policies in force to over 14.7 million during the same period.

“Apart from life insurance products, Nippon Life Insurance sells products such as defined contribution pension plans and medical coverage plans.

“Reliance Life has sold at least seven million policies and managed assets worth at least R 17,000 crore as on 31 December.

“The company has infused at least Rs 3,000 crore so far in growing its life insurance businesses, and the deal with Nippon Life will help the company to cover most of this cost.”

FDI of up to 26 per cent is permitted in the insurance sector in India. Some of the leading domestic insurance companies with foreign tie-ups include ICICI Prudential, Bajaj Allianz, Bharti Axa and Tata AIG.

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