Reliance Cap invites Nippon Life to buy it out of MF JV

Mumbai : Reliance Capital has invited its asset-management partner Nippon Life Insurance Co. to make an offer to acquire its 42.88 per cent stake in a listed mutual fund business the Anil Ambani company jointly owns with Japan’s biggest money manager.

Reliance Nippon Life Asset Management (RNAM), the listed asset manager from which Reliance Capital is seeking to exit, ranks fifth by way of assets under management (AUM) in the Indian mutual fund industry. The asset management company manages assets worth Rs 2.43 lakh crore as in January 2019.

Last fiscal, RNAM made a net profit of Rs 522 crore.


At present, both Reliance Capital and Reliance Nippon Life Asset Management Company are equal partners in the asset manager, holding 42.88 per cent each. About 14 per cent equity is held by the Indian public.

RNAM shares surged 20 per cent to Rs 187 on Thursday. At this price, the company has a market capitalization of Rs 11,450 crore.

The Indian mutual fund industry is concentrated in favour of the biggest names, with the 10 largest asset managers accounting for four-fifths of the industry’s total AUM since March 2016.

With more than $700 billion in assets, Nippon Life, a Fortune 100 company, is Japan’s largest asset manager.

Nippon Life is expanding its global asset management footprint and recently acquired stakes in DWS and TCW as part of that strategy.


It has operations in Japan, Australia, the US, China, Europe, Thailand and Indonesia. If the transaction were to go through, Nippon Life would be required to make an open offer to comply with the existing takeover code.

HDFC Mutual Fund and RNAM are the only two listed asset management companies in India. RNAM went public in November 2017, at a price of Rs 252, while HDFC did it in July 2018 at a price of Rs 1,100 a share.

As the deal would involve control change, analysts believe the sale would happen at a premium to the current market price.