A trade union representative in the EPFO has opposed its fund manager Anil Ambani group firm Reliance Capital Asset Management’s decision to sell 26 per cent stake to Japanese insurance firm Nippon Life.
“We are against the entry of foreign investor in the asset management firm managing EPFO funds. This is very dangerous and against the interest of workers,” B N Rai, Secretary Bharatiya Mazdoor Sangh said.
Under the contract with the EPFO, its fund managers, “shall not undertake any corporate action including mergers, amalgamations, take over, acquisition, divestment etc, without the prior written approval of the Trust”.
The matter came up for discussion before the EPFO’s advisory body, Finance and Investment Committee (FIC), on Friday, and faced opposition from Mr. Rai, the sole union member who was present at the meeting.
In view of the stiff opposition, the issue, which was listed on the agenda, was dropped at the recent meeting of the Central Board of Trustees (CBT), the apex decision making body of the Employees’ Provident Fund Organisation (EPFO), at Chennai on Friday.
When the company was contacted, Reliance Capital Asset Management CEO Sundeep Sikka said “We are not aware of issues, if any, raised by trade unions representatives, in relation to EPFO approvals,” he said.
He said Reliance Capital Asset Management has announced a 26 per cent equity stake sale to Nippon Life Insurance “subject to various regulatory approvals which have already been applied for”. Approval from the Competition Commission of India has already been received, he added.
“However, considering that two of the four approved EPFO funds managers - HSBC and ICICI - already have foreign equity stakeholders to the extent of 26 per cent or higher, we would expect the approvals to be granted in the normal course”, Mr. Sikka said.
The EPFO had appointed Reliance Capital as its fund manager in July last year. It manages a part of huge EPFO corpus of Rs 3 lakh crore.
Mr. Rai further said: “We will oppose the proposal in the CBT also. We want domestic fund managers”.
Another EPFO trustee and unionist, A D Nagpal said: “We will oppose the deal in the next CBT meeting”.
Similar views were also expressed by D L Sachdev, another CBT member and Secretary of All India Trade Union Congress.
Competition watchdog CCI had recently approved the deal, which was valued at an aggregate amount of Rs 1,450 crore and is the largest Foreign Direct Investment (FDI) deal in any Indian asset management company till date.