Merger between LIC MF and IDBI MF in advanced stage: LIC Mutual Fund MD

Merger between LIC Mutual Fund and IDBI Mutual Fund is at a "fairly advanced stage", a top official said on Thursday.

"The process is on, it is at a fairly advanced stage," LIC MF's managing director and chief executive T S Ramakrishnan told reporters, when asked about reports of the merger.

Recent media reports have said that LIC Mutual Fund plans to absorb IDBI Mutual Fund following a regulatory diktat barring a single promoter from owning more than 10 per cent stake in two asset management companies. IDBI Bank, the parent of IDBI MF, is majority owned by LIC for the last few years.

Ramakrishnan added that as and when LIC MF, the 22nd largest MF in the country with over Rs 18,000 crore in assets under management, is in a firm comment on the merger process, it will inform everybody.

According to reports, there were two attempts to sell IDBI Mutual Fund that could not be successful, and it resulted in the merger with a company owned by the same parent.

Meanwhile, Ramakrishnan said the fund house is targeting to be among the top 10 by AUM (Assets Under Management) in the next five years, and will be taking specific steps like pushing its distribution efforts and investing in the brand.

It is aiming to increase the share of equity investments to the industry average of 45 per cent of the AUM by FY24 from the present level which is about 12-13 per cent lower, Ramakrsihnan said.

The fund house will play to its core strength of reach in the tier-II and tier-III cities which present the biggest opportunity of growth for the industry, he said, adding that focus on high net-worth individuals will also continue.

He said India has the potential to have at least 40 crore investors as against less than 4 crore right now.

The asset management company, which announced a new fund offering for an equity multicap fund on Thursday, is also looking at two thematic funds to play the consumption and manufacturing stories, officials said.

Its chief investment officer for equity, Yogesh Patil, said the next ten years present strong growth potential for the Indian equity markets and urged investors to capitalise on the same.

Foreign institutional investors (FII), who have been on a selling spree lately, will come back to Indian markets in the next 6-7 months because of the returns potential here. Till the time they are absent, the retail money will lend support to the local markets, he added.

The NFO (New Fund Offer) for the multicap offering, which will be investing 25 per cent each in large, mid and small caps and leave the remaining 25 per cent at the discretion of the fund manager, will be open between October 6 and October 20.

Patil said the key differentiator for the multicap fund will be an in-house formula adjusting the allocation of chosen stocks within the portfolio in line with the evolving macro variables.