Reliance Nippon IPO to open on 25 October
Mumbai: Reliance Nippon Life Asset Management Ltd, India’s third-largest mutual fund manager, on Thursday said it will launch its Rs1,542 crore initial public offering (IPO) on 25 October. It will be the first IPO by an Indian mutual fund manager.
The asset management company has set a price range of Rs247-252 per share for the IPO, which values it at Rs15,116-15,422 crore. The offer will close on 27 October.
Reliance Nippon Life Asset Management is jointly promoted by Reliance Capital Ltd, a part of Anil Ambani-led Reliance Group which currently holds 46.57%, and Nippon Life Insurance Co., a leading private life insurer in Japan, which holds 49%.
Reliance Nippon Life Asset Management is involved in managing mutual funds (including exchange-traded funds), managed accounts which include portfolio management services, alternative investment funds, pension funds, and offshore funds. As of 31 March, it had assets under management of Rs2.11 trillion.
In 2016-17, the company reported a revenue of Rs1,400.4 crore, up 10% from the previous fiscal. The company reported a profit of Rs405.5 crore in 2016-17, up 4% from a year ago.
The IPO will see a total stake dilution of 10%. The public offering includes a fresh issue of Rs617 crore. The proceeds from the fresh issue will be used for setting up new branches and relocating existing branches, upgrading the information technology system, advertising, lending to its subsidiary Reliance AIF, investing in new mutual fund schemes managed by the company and funding inorganic growth.
Promoters Reliance Capital and Nippon Life will collectively sell 36.72 million shares, which at the upper end of the price band will fetch Rs925 crore. Reliance Capital will sell shares worth Rs283 crore, while Nippon Life will offload shares worth Rs642 crore.
Reliance Nippon Life Asset Management also plans to grow inorganically. In 2015, the asset manager acquired the mutual fund business of Goldman Sachs Group Inc. in India for Rs243 crore (about $37.5 million) in an all-cash deal.
“There are 41 asset management companies; the majority of the market is dominated by top ten companies, accounting for 80% of the industry’s assets under management. We will look for inorganic growth in the future; similar to what we have done with Goldman Sachs India in the past,” said Sundeep Sikka, CEO, Reliance Nippon Life Asset Management.
The Indian mutual fund industry has witnessed a strong inflow of funds in the last couple of years. Mutual fund industry’s total assets under management stood at Rs20.4 trillion at the end of September, a 29% growth since September 2016, data from the Association of Mutual Funds of India shows.
“Government’s initiatives like demonetization, Jan Dhan Yojana and Aadhaar have led to a lot of money coming into the banking sector, which has consequently brought down interest rates. All these factors throw up a humongous opportunity for mutual fund industry and we will capitalize on this,” said Sikka.
Apart from Reliance, UTI Asset Management Co. Ltd, India’s oldest and the sixth largest asset management company, has also been planning to go public.
In May, Mint reported that UTI Asset Management is ready to launch an IPO and will offer to sell 26-30% of its equity. The asset manager’s four state-run sponsors, State Bank of India, Bank of Baroda, Punjab National Bank and Life Insurance Corp. of India (LIC), have agreed to dilute their stake in the asset manager, Mint reported.
Reliance Group companies have sued HT Media Ltd, Mint’s publisher, and nine others in the Bombay high court over a 2 October 2014 front-page story that they have disputed. HT Media is contesting the case.