Aditya Birla Capital, Nippon Life merger talks fail

The discussions broke down over disagreements on shareholding and governance rights.

Merger discussions between  Aditya Birla Capital and Nippon Life have broken down, a report said.

According to PTI, sources said Nippon Life, which owns a 49% stake in Reliance Nippon, a life insurance joint venture with Reliance Capital, refused to reduce its stake. Nippon Life reportedly was planning to merge Reliance Nippon Life with Birla Sun Life Insurance, which is backed by Aditya Birla Capital.

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Nippon Life’s stake would have been diluted to below 10% had the merger succeeded however the Japanese insurer was not comfortable with losing all the shareholders and the governance rights because as per the Insurance Regulatory and Development Authority of India’s (IRDAI) guidelines, an entity cannot float two life or non-life insurance entities. 

As such it would have been mandatory for Birla Sun Life to merge with Reliance Nippon Life Insurance had its promoters emerged as successful bidders during Reliance Capital’s insolvency resolution process.

Reliance Capital and its subsidiaries are currently undergoing insolvency resolution, with the group having a consolidated debt of around $4.93b.