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Reliance Capital’s mutual fund arm plans to go public

07 June, 2017

Reliance Nippon Life Asset Management Ltd, the asset manager to Reliance Mutual Fund, said on Wednesday its board of directors has approved a plan to float an initial public offering.

The company will be the first among the top three players in the asset management industry to list its shares on stock exchanges, its majority owner Reliance Capital Ltd said in a statement.

Reliance Nippon Life will start discussions with merchant bankers, lawyers and auditors for the IPO process soon, the statement said. The percentage of dilution is yet to be decided, it added.

The company, formerly Reliance Capital Asset Management Ltd, didn’t specify the amount it planned to raise or what would it do with the capital to be mobilised. But Sundeep Sikka, CEO at Reliance Nippon Life, said the company would like to be ready to take advantage of “suitable acquisitions”.

The asset management company’s plan to float an IPO comes amid hectic activity in the capital markets. Eight companies have raised nearly Rs 6,400 crore this calendar year, extending the good run for IPOs after a blockbuster 2016 when fundraising by companies via initial share sales jumped to a six-year high of Rs 26,500 crore, data from the Securities and Exchange Board of India show.

The company’s assets under management (AUM) grew 25% to Rs 358,059 crore ($55.1 billion) as on 31 March 2017. This includes mutual fund AUM of Rs 210,891 crore. Its total income rose 9% to Rs 1,436 crore and profit before tax increased 16% to Rs 581 crore in 2016-17.

Reliance Nippon Life Asset Management acts as the adviser for India-focused equity funds and fixed-income funds in Japan and Korea. It also manages offshore funds through its subsidiaries in Singapore and Mauritius, catering to investors across Asia, the US and Europe.

Reliance Capital, led by billionaire Anil Ambani, owns a 51% stake in the asset management company while Japan’s Nippon Life Insurance Company holds the remaining. The Japanese insurer had originally picked up a 26% stake in the asset management firm for $290 million in 2012, valuing it at Rs 5,600 crore ($920 million then).

Nippon Life increased its stake in two stages—it first bought a 9% stake for Rs 657 crore in 2014 and purchased another 14% in 2015 for Rs 1,196 crore in a transaction that valued the Indian asset manager at Rs 8,542 crore.

Reliance Capital’s other businesses include life and general insurance, stockbroking, wealth management, home finance, distribution of financial products and asset reconstruction. Last month, Reliance Capital received approval from stock exchanges to spin off and separately list its home finance unit.

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Reliance Capital’s mutual fund arm plans to go public

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