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Nomura part-exits mutual fund business with LIC

15 December, 2015

Nomura Asset Management Co. Ltd is selling more than half its stake in its mutual fund joint venture with Life Insurance Corporation and the state-run firm’s mortgage lending arm, in the latest instance of a foreign investor pulling out of India’s crowded mutual fund industry.

LIC Housing Finance Ltd said in a stock-exchange filing on Tuesday it will buy a 19.3 per cent stake each in LIC Nomura Asset Management Company and LIC Nomura Mutual Fund Trustee Company from the Japanese company for Rs 27.36 crore and Rs 1.52 lakh, respectively.

Nomura currently owns a 35 per cent stake each in the two companies. It had entered into a joint venture with India’s largest insurer for the mutual fund business in 2011. 

LIC Housing currently holds 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. 

Media reports had previously said that Nomura planned to sell its entire stake in the mutual fund venture. An email sent to LIC asking whether it was buying Nomura’s remaining stake did not elicit any response till the time of writing this article.

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 deal is valued 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 AUMs.  

LIC Nomura MF had undergone drastic changes this year, appointing new CEO, CIO and COO and hiring experts to ramp up business and take on competition.

It had named Sarojini Dikhale, senior executive director at LIC, as its CEO in July after Nilesh Sathe moved to the Insurance Regulatory and Development Authority of India as a whole-time member.  

The company had also announced plans last month to raise Rs 200 crore through its new open-ended exchange-traded fund.

Foreign investors exit

The Indian mutual fund industry has seen many foreign firms exiting over the past couple of years. 

Recently, Reliance Capital announced plans to buy Goldman Sachs’s mutual fund business in India.

Belgium’s KBC Asset Management had sold its stake in Union KBC Mutual Fund where it held a 49 per cent stake. Deutsche Bank also announced an exit from its India MF business, selling it to Pramerica earlier this year. 

Last year, Morgan Stanley, ING and PineBridge had exited India ‘s MF industry.

While foreign firms have been exiting the MF business in India, there have been a few exits by Indian companies as well this year. Religare sold its entire stake to Invesco in November while Nippon agreed to purchase a 49 per cent stake in Reliance MF.


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Nomura part-exits mutual fund business with LIC

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