Reliance Capital and its Japanese partner in life insurance, Nippon Life Insurance, will explore strategic tie-ups in finance, initially in the asset management and private equity businesses of the Indian group.

Any strategic collaboration would boost Nippon Life's presence in India, while giving Reliance Capital better access to capital and expertise, analysts said.

Reliance Capital, controlled by billionaire Anil Ambani, manages assets of over $23 billion across mutual funds, pension funds, managed accounts and hedge funds. Its other businesses include insurance, broking, consumer and commercial finance.

Reliance Capital's chief executive Sam Ghosh told Reuters the two firms would initially explore partnerships in asset management and the private equity business, whereby Nippon Life could pick up a stake in the Indian firm's businesses.

Reliance Capital is looking to manage assets for Nippon Life's funds in India and also partner with the Japanese firm in other growth economies, he added.

The two firms will also explore possibilities for a distribution tie-up in India for Nippon Life's funds, Ghosh said.

"We will discuss all areas," Ghosh added. Deven Choksey, CEO & MD of brokerage KR Choksey, said: "Everybody wants to establish themselves in other geographies, especially Japanese companies because of saturation at home."

Japanese companies are stepping up the pace of their overseas expansion after the devastating March 11 earthquake provided another spur to escape a moribund domestic economy.

"Reliance Capital is India's No.1 AMC (asset management company) in size, so that gives Nippon an advantage of getting into this business as it is already established," Choksey said. Reliance Capital's asset management unit lost market share in the quarter to end-June, but is still the industry leader.

"Capital cannot be the sole criterion why they are going to Nippon. They probably want a strategic partner," said Jagannadham Thunuguntla, head of research at SMC Global Securities.

"If an equity deal works out, Reliance Capital will benefit from the Japanese firm's product innovation and brand value," Thunuguntla added.

Reliance Capital's net profit in the June quarter more than halved with income across its core businesses dropping.

Last month, brokerage ICICI Direct said it expected the firm's asset management business to improve due to a greater focus on the retail segment while Citigroup said stiff competition, sluggish inflows, and weak recovery prospects would hurt in the near-term.

In March, Nippon, the world's No.7 life insurer, agreed to pay $680 million to buy a 26 percent stake in Reliance Life Insurance, valuing the business at $2.6 billion.

Indian rules bar foreign firms from owning more than 26 percent in insurance joint ventures with local firms.

Reliance Capital saw a 59-percent fall in its annual premium equivalent in its insurance business for the quarter to end-June, but analysts expect the fund infusion by Nippon to boost its valuation.

Shares of Reliance Capital have fallen about 43 percent in 2011 so far, but analysts see this as a good opportunity to buy.