Nippon Life Insurance Co: announced earlier today that they would be upping their existing stake in Reliance Capital Asset Management (RCAM), from 26% to 49% in 2 or more tranches. The first trance, an investment of Rs. 657 cr. would increase their holding to 35%, valuing the company at Rs. 7,300 cr. The subsequent tranches are optional, and would be based on revised valuations prevalent at the time.
RCAM currently has Assets Under Management (AUM) of Rs. 2.18 lakh cr. That means that the valuation is approximately 3.35% of AUM.
Nippon had initially bought into RCAM in 2012, shelling out Rs. 1,450 cr. for 26%, thus valuing the company at about Rs. 5,577 cr.
Earlier, in 2007, Eton Park, a hedge-fund founded in 2004 by former GS partner Eric Mindlich, acquired a 5% stake in RCAM for Rs. 501 cr. This pegged RCAM’s valuation at Rs. 10,000 cr. At that time, it had AUM of Rs. 77,765 cr. That is, a valuation which was 13% of AUM. This ratio was unprecedented in the AMC space.
The same ratio, as noted above, is currently at 3.35% of AUM.
RCAM is a unit of Reliance Capital (BSE: 500111; NSE: RELCAPITAL). Reliance Capital ended today at Rs. 501.45, up 4.24% from yesterday’s close.