The Anil Ambani-led Reliance Group is seeking a valuation of Rs 15,422.4 crore ($2.36 billion) for its mutual fund arm, Reliance Nippon Life Asset Management Co Ltd, as it prepares to launch its initial public offering on 25 October.
The joint venture between Reliance Capital and Nippon Life, which happens to be India’s third largest mutual fund manager, has set a price band of Rs 247-252 per share for the public float, the company said.
The anchor book for the IPO will open one day before the three-day issue goes live to close on 27 October. It comprises a fresh issue of 24.48 million shares and a secondary sale of 36.72 million shares, which will mark a partial exit by promoter entities.
The IPO, the first ever by a mutual fund company in India, is pegged at Rs 1,542.24 crore at the upper end of the price band. The issue will see a 10% stake dilution on a post-issue basis.
Japanese partner Nippon will be offloading 25.49 million shares, while the remaining offer for sale comprises a stake sale by Reliance Capital. After the IPO both partners will hold 42.88%, each, in the JV. Currently Nippon holds a 49% stake.
The promoters will get three years to meet the 25% minimum public shareholding (MPS) norms set by the capital markets regulator.
Reliance Nippon had filed its draft red herring prospectus on 18 August and received the regulatory approval for it on 5 October.
The company is one among two-dozen firms awaiting a green signal from SEBI for their IPOs or have already got a nod to launch their public issues.
VCCircle had first reported on the company’s plans to go public with the hiring of merchant bankers.
In July, Nippon Life had raised its stake in the mutual fund JV to 49% for Rs 378 crore, according to stock exchange filing by Reliance Capital. In 2014, it had acquired a 9% stake for Rs 657 crore and had followed it up with a 14% stake buyout in 2015 for Rs 1,196 crore, in a transaction that had valued the Indian asset manager at Rs 8,542 crore.
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.
Reliance Nippon 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.
The company’s assets under management grew 25% to Rs 358,059 crore ($55.1 billion), including mutual fund assets of Rs 210,891 crore, as on 31 March 2017. Its total income rose 9% to Rs 1,436 crore and profit-before-tax increased 16% to Rs 581 crore in 2016-17.
Reliance Capital’s other businesses include life and general insurance, stockbroking, wealth management, home finance, distribution of financial products and asset reconstruction. Last month, it had received approval from stock exchanges to spin off and separately list its home finance unit.
Recent deals
IIFL Special Opportunities Fund had bought a 2.59% stake in Reliance Nippon Life for $60 million through a secondary market purchase from US-based hedge fund Eton Park Capital Management. The deal valued the company at Rs 15,000 crore. As of March 2016, Eton Park held 4.43% in the company.
IIFL Special Opportunities Fund primarily invests in companies before or during IPOs.
In May, it had picked up a 1.59% stake in ICICI Lombard General Insurance Company Ltd for $49.94 million. The fund also acquired a substantial chunk of Indian Energy Exchange’s shares during its recently concluded IPO.
