Anil Ambani-led Reliance Group plans to come out with an initial public offering for its mutual fund arm, which is expected to value the company at about Rs 20,000 crore. It could be the first initial public offering by a major asset management company (AMC) in India though smaller rival UTI MF’s IPO plans have been in the works for a long time. The board of Reliance Nippon Life Asset Management (RNAM) today approved a proposal to list its shares on the stock exchanges, the company said.
It would soon initiate the process to appoint merchant bankers, lawyers and auditors to manage its initial public offer (IPO). Reliance MF is the third largest player in 42-member strong mutual fund industry. RNAM has assets under management (AUM) of Rs 3.6 lakh crore, including Rs 2.11 lakh crore for mutual fund.
Typically, asset management companies are valued at 5 per cent of AUM, which is likely to value Reliance MF at about Rs 20,000 crore and a 10 per cent stake sale could fetch Rs 2,000 crore, analyst and market sources said. As per markets regulator Sebi’s listing norms, the company has to dilute a minimum of 10 per cent to list on stock exchanges which will increase to 25 per cent in three years.
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“As a part of financial inclusion we have been creating wealth for mutual fund unit holders. Now we also believe it’s an opportunity for retail investors to participate as equity shareholders in the AMC,” Reliance Nippon Life Asset Management CEO Sundeep Sikka said.
“Along with further consolidations happening in economy we would like to be ready to take advantage of suitable acquisitions,” he added. Without divulging valuation details, Sikka said the aim is to dilute 10 per cent stake by March and further 15 per cent over three years as per Sebi norms.
This would be the first IPO by a Reliance group firm in about a decade since Reliance Power’s public offer in 2008. Reliance Nippon Life Asset Management is a subsidiary of Reliance Capital with Nippon Life Insurance Company as its strategic partner. Reliance Capital holds 51 per cent stake in RNAM.
RNAM offers a well-rounded portfolio of products that meet varying investor requirements and constantly endeavours to launch innovative products and customer service initiatives to increase value to investors. UTI MF’s public issue will allow a partial exit to four of its investors—State Bank of India, Life Insurance Corporation, Bank of Baroda and Punjab National Bank.