The board of Reliance Nippon Life Asset Management has approved the listing of the fund house with an initial dilution of 10% in the current financial year.
This would be the first instance of a mutual fund house going public though UTI Mutual Fund has also been trying for a while now to launch its initial public offer.
On Wednesday, the board approved the decision to dilute 10% in FY18 and, as per regulatory requirement, increase the public holding to 25% within three years i.e. 2021.
Discussions with merchant bankers, lawyers and auditors for the public issue would be initiated soon, said a statement by the fund house.
“We think it’s time for us to share the wealth with retail investors who can now be equity shareholders in the mutual fund company,” said Sundeep Sikka, chief executive officer, Reliance Mutual Fund.
Reliance Mutual Fund is among the largest fund houses of the country with assets under management (AUM) worth nearly ₹2.11 lakh crore. It has the second-highest retail AUM of ₹52,657 crore that includes ₹41,042 crore from beyond the top 15 cities.
In terms of profitability, the profit before tax of the fund house has risen from ₹72 crore in 2007 to ₹581 crore in 2017. Incidentally, it is among the top two most profitable asset management companies of India.
While Mr. Sikka did not elaborate on the manner in which the issue would be structured, it is most likely that both the promoter entities — Reliance Capital and Nippon Life Insurance — would dilute in an equal proportion.
Japan’s Nippon Life Insurance bought a 26% stake in the fund house in 2012 and then increased it to 35% in 2014. Thereafter, it again increased its stake to 49% in 2016.
“We are still evaluating the structure and other details of the offering. Today, we just got the board approval. We will share further details going ahead,” said Mr. Sikka.
