Nippon Life eyes Indian fund market with Reliance deal

Anil Ambani
Image caption Anil Ambani has built Reliance Capital into one of the India's biggest financial services company

Nippon Life Insurance has agreed to buy a 26% stake in Reliance Capital Asset Management in a bid to tap into the fast-growing Indian market.

The Japanese firm will pay $290m (£187m) for the stake in India's second-largest fund manager.

The deal comes as India's economic expansion has seen substantial growth in the financial services sector.

At the same time, Japanese firms have been facing a stagnating domestic market.

"The Indian mutual fund market has grown rapidly since it was opened to the private sector in 1993," Nippon Life said in a statement.

"It is an attractive market that is expected to achieve robust growth in the long term due to the second-largest population in the world and solid economic growth led by the service sector and domestic consumption."

Big boost?

The deal valued Reliance Capital's asset management business at $1.1bn.

Analysts said the valuation was a big boost for the Anil Ambani-controlled group as it has been looking for investors to buy a stake its other businesses in a bid to help pay for its debt.

Reliance Communications, the group's flagship company, has almost $6bn in debt.

Last year, Reliance capital sold a 26% stake in its life insurance business to Nippon Life for $680m.

The company's chief executive Sam Ghosh said last month that the firm was in talks with potential investors to sell a similar stake in its general insurance business.

Earlier this week, the firm announced that it had reached a deal with Chinese banks to borrow $1.18bn to help pay for some of its debt.

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