According to insiders, if Aditya Birla Capital is chosen as the winning bidder for the life insurance venture of the indebted Reliance Capital Ltd (RCL), the two companies are reportedly in talks to merge their separate insurance ventures. A merger between Reliance Nippon Life and Birla Sun Life Insurance, a unit of Aditya Birla Capital, may be taken into consideration by Nippon Life, a partner in RNLIC with a 49 percent stake. A subsidiary of the bankrupt Reliance Capital, which is going through the bankruptcy resolution process, is RNLIC.
A company cannot float two life insurance companies or non-life insurance companies, according to IRDAI regulations. If Birla Sun Life’s promoters are chosen as the winning bidder during the resolution process of RCL, Birla Sun Life will be forced to combine with Reliance Nippon Life Insurance. In response to media’s inquiry, Aditya Birla Capital remained silent. Sources claim that, based on the valuation of both insurance companies, Nippon Life’s stake in the combined company will be reduced from its present 49 percent to roughly 15 percent.