LIC Housing to buy Nomura's part stake in mutual fund JV

Agrees to buy 19.3% stake for Rs 27 crore; part of Nomura's strategy to exit LIC Nomura Mutual Fund

Another foreign player on Tuesday initiated the process of exiting from the mutual fund business in India. In a BSE filing, the LIC Housing Finance informed the markets that it is buying Nomura's 19.3 per cent stake in LIC Nomura Mutual Fund. The deal has been pegged at Rs 27.36 crore.

LIC Housing Finance informed the BSE that it had received an offer to acquire the stake, which was cleared a part of the fund house's board decision on Tuesday.

The mutual fund is co-owned by Life Insurance Corporation of India (LIC), LIC Housing Finance and the Japanese financial firm, Nomura Holding - 45 per cent, 20 per cent and 35 per cent stakes, respectively. With this deal, Nomura's stake will come down to a little above 15 per cent.

LIC Nomura Mutual Fund manages assets worth Rs 11,157 crore as of September 2015.

Market participants feel this is the first step towards Nomura completely exiting the mutual fund joint venture. Nomura has been reportedly unhappy with the way the fund house was run and the inability of the fund house to shore up assets after Nomura bought a a stake in the fund house. According to sources, most Nomura representatives have already quit LIC Nomura.

If the deal size is any indication then Nomura has sold its stake at a loss. In July 2009, Nomura had picked up the 35 per cent stake for Rs 308 crore, as it had valued the fund house at Rs 800 crore.

Several foreign houses have exited India since 2012. Anil Ambani-owned Reliance Mutual Fund, for example, recently agreed to acquire US-based Goldman Sachs' domestic asset management business for Rs 243 crore. Last year, HDFC MF acquired Morgan Stanley's fund business in India. Other recent deals include Birla Sun Life MF, acquiring the assets of ING Mutual Fund and Pramerica taking over Deutsche Bank's mutual fund business in India.

On Tuesday, shares of LIC Housing Finance ended 0.45 per cent lower at Rs 470.85 apiece on the BSE.