Tokyo, Sep 3 (IANS): Nippon Life Insurance of Japan wants to hike its stake in its Indian joint venture Reliance Life Insurance to 49 percent from 26 percent, when India notifies the decision of higher foreign equity cap in the sector, a news report here said.
“The two sides are in talks and will likely seal the deal as soon as the legislation raising caps on foreign investment in Indian insurers passes,” said the Nikkei Asian Review, quoting Reliance Group Managing Director Amitabh Jhunjhunwala.
According to the Nikkei Asian Review report the Indian group, led by billionaire industrialist Anil Dhirubhai Ambani, welcomes additional the investment by Nippon, which already holds the current maximum permissible stake of 26 percent.
“Nippon Life sees great potential in India. The penetration rate of insurance services there, based on the size of its economy, amounts to less than half those in Japan and other developed countries," said the report.
"The number of people in the insurance market will likely balloon as the middle class expands,” it said, adding Japanese company hopes the investment will strengthen its ties with Reliance in product development and sales, to develop a future source of income.
Reliance Life Insurance adopted Nippon Life sales techniques after the Japanese company made its first investment back in 2011. The new business model, a departure from Indian traditions, has proved a success, Jhunjhunwala said.
Reliance Life plans to inculcate more of Nippon Life's strategies and practices in the future. It aims to increase sales its offices from 30 to 50 as well as double its sales force from 750 or so to 1,500, the report added.
Earlier, over the weekend, the two groups announced two funds for Japanese investors in the Indian equities and bonds markets, as also to jointly start a commercial bank when permission comes from Indian authorities.
The announcement, coinciding with Prime Minister Narendra Modi's first official visit here that concluded Wednesday, further expands and deepens the relationship between the Indian and the Japanese groups, a joint statement said.
The Japanese life insurance firm, as part of its strategy to enhance investments outside of Japan, has invested substantially in the Indian equity funds since October 2012 and in bond funds since 2013 -- both through Reliance Capital.
A Fortune 100 company and the fifth largest private life insurer in the world, Nippon Life Insurance is also the biggest foreign direct investor in Indian asset management and life insurance sector till date.
The Japanese insurer has 26-percent stake in Reliance Capital Asset Management for $290 million and Reliance Life Insurance Company for $680 million in 2011.