Corporation Bank Ltd will acquire a 4 per cent stake held by Nomura Asset Management in the Japanese company’s mutual fund joint venture with Life Insurance Corporation and the insurer’s mortgage lending arm.
The state-run lender said in a stock exchange filing it will buy the stake in LIC Nomura Asset Management Company Ltd for Rs 5.66 crore ($845,000).
The deal comes after LIC Housing Finance Ltd said last month it was a 19.3 per cent stake in the asset management company and the related trustee company from Nomura. Subsequently, GIC Housing said it would purchase up to a 16 per cent stake in the fund house.
The move by the Mangalore-based bank comes a few days after LIC increased its stake in the lender to 21.22 per cent via a preferential share issue.
The move comes a few days after LIC increased its stake in Corporation Bank to 21.22 per cent
Nomura had entered into a joint venture with India’s largest insurer for the mutual fund business in 2011. Before these deals, Nomura owned a 35 per cent stake each in the two companies while LIC Housing held 16 per cent and 20 per cent in the trustee company and the AMC, respectively. LIC owns 49 per cent in the trustee company and 45 per cent in the AMC.
LIC Nomura Mutual Fund had Rs 11,156.65 crore in average assets under management for the quarter ended September 30, making it the 19th largest player among 44 mutual fund houses in the country.
The three deals in the last two months value the mutual fund business at just 1.2 per cent of AUM, way lower than industry average. Japan’s Nippon, which had inked a deal with Reliance Capital Asset Management to raise its share by 14 per cent to 49 per cent in October, had valued the Indian company at 3.51 per cent of AUM.
LIC Nomura MF had undergone drastic changes this year, appointing a new CEO, CIO and COO and hiring experts to ramp up business and take on competition. It had Sarojini Dikhale, senior executive director at LIC, its CEO in July after Nilesh Sathe moved to the Insurance Regulatory and Development Authority of India as a whole-time member.