Tuesday, October 11, 2011

Reliance Life Insurance sells stake

Reliance Capital has announced that they have made a deal regarding the sale of 26% stake of Reliance Life Insurance. The stake has been sold to Nippon Life which is a Japanese company. And it’s also the maximum percentage a foreign company can invest in India in the Insurance sector.

Nippon Life has paid a total amount of $680 million to buy the 26% stake in Reliance Life Insurance to Reliance Capital. This puts the value of the whole company, Reliance Life Insurance at $2.6 billion.

Reliance Life Insurance had to get approval from Reserve Bank of India before they good go through with the deal. The approval was got on September 30, 2011 and the funds were transferred in the following week.

There are a lot of international Insurance companies in the Indian market waiting for the Government to raise the limit of Foreign Direct Investment. Slowly and steadily the pressure has been increasing on the Indian 
Government. And once the limit is raise there are almost guaranteed investment which would be in billions. But with LIC’s monopoly in the market which some experts consider could be threatened by foreign players, the Government is taking its own sweet time.

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