Nomura to pay Rs 138 cr for 19% of LIC MF stake

Japan’s Nomura will pay about Rs 138 crore ($29 million) to buy 19.3 per cent stake in LIC Mutual Fund as part of a deal to acquire 35 per cent stake, a top official of a group firm of the Indian money manager said. The deal values the fund firm at $149.3 million, or about 2.5 per cent of its May average assets of nearly Rs 28,600 crore.”We have got around 39.3 per cent stake in LIC Mutual Fund,” RR Nair, chief executive of LIC Housing Finance, said. “Twenty percent we will be holding back. The balance will be offloaded to Nomura.”

LIC Housing and LIC Mutual are subsidiaries of state-owned Life Insurance Corp of India, the country’s largest insurer. The deal was valued lower than 4-5 per cent of the average assets under management (AAUM) that many Indian money managers have fetched because more than 90 per cent of LIC Mutual’s assets were in low margin fixed-income funds, said Chintamani Dagade, a senior research analyst at Morningstar India.

“Such a valuation will be in line with what the market will be expecting... it looks okay,” he said. In a release to the Bombay Stock Exchange (BSE) on Saturday, LIC Housing Finance said the company had decided to sell 1,730 equity shares of LIC Mutual Fund of Rs 10,000 each out of the 3,930 equity shares that it held.

Similarly, the board of directors of LIC Housing Finance will sell 2,000 shares of LIC Mutual Fund held by them. Further, LICHFL Care, the 100 per cent subsidiary of LIC Housing Finance, will sell 1,200 equity shares of LIC Mutual Fund.

Separately, mortgage lender GIC Housing Finance said its board had approved sale of its entire holding of 11.2 per cent in LIC Mutual and 3 per cent in LIC Trustee Company for about Rs 89 crore

GIC officials could not be immediately reached for comment but Nair at LIC Housing said the deal was part of a plan to sell 35 per cent of LIC Mutual to Nomura to give the Indian money manager access to global markets and strengthen its operations. “This is to bring in an international player with expertise and exposure,” Nair said. “We thought it will benefit the company.”

“After the deal, both LIC and LIC Housing (together) will hold 65 per cent in LIC Mutual Fund,” he said. LIC Mutual Chief Executive Sushobhan Sarker confirmed holding talks to sell a stake to Nomura, but declined to give details citing non-disclosure agreement. Nomura Asset Management spokeswoman in Japan also declined comment.