Deal values the fund house at Rs 800 crore.
LIC Mutual Fund (LICMF), a subsidiary of the country largest insurer Life Insurance Corporation of India (LIC), announced a 35 per cent stake sale to Nomura Holdings Inc. The stake was sold at Rs 308 crore, thereby valuing the fund house at Rs 800 crore.
In the new shareholding pattern of LICMF, LIC Housing Finance will hold 20 per cent, Nomura will have 35 per cent and parent LIC will have 45 per cent.
Out of Rs 308 crore, Rs 80 crore will go to LICMF and the rest will be divided among other stakeholders such as LIC Housing Finance, LIC and General Insurance Company.
Under the new arrangement, the management control will remain with LICMF. Also, the positions of CEO, CIO (debt) and CMO will remain with LICMF, while the COO and CIO (equity) will be from Nomura.
Speaking during the announcement, TS Vijayan, chairman, LIC, said, “LICMF will also be looking at launching an offshore fund as there is enough appetite for Indian stocks among overseas investors.”
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LIC has booked profits worth Rs 2,800 crore in the current financial year till July 10. As on June 30, its corporate debt portfolio has registered a growth of 88 per cent for the year 2009-10.
It has a total investible corpus of Rs 1.75 lakh crore in 2009-10. The insurer will be pumping Rs 50,000 crore in equity and more than Rs 35,000 crore in NCDs (non-convertible debentures). The company’s investment in NCDs was Rs 14,700 crore in 2007-08 and another Rs 35,000 crore in 2008-09.
N Mohan Raj, executive director, investments at LIC, said that though they could hold AA papers, 72 per cent of their existing holdings were in AAA-rated papers and they were held to maturity.
LIC had subscribed to Tata Steel and Hindalco’s NCDs last year. It had subscribed to these NCDs at yields of 12 to 14 per cent. “However, the yields will come down for fresh NCDs this year. It would not be as high compared to last year,” warned Mohan Raj said on the sidelines of the conference.
The parent company will also allocate 15 per cent to infrastructure and housing sectors and a small portion to venture capital funds.
“We want to contribute to the Indian capital market, connecting investors around the world to India. There is a huge value in finding a local partner who knows every aspect of Indian capital market and culture,” said Takumi Shibata, deputy president, Nomura Holdings Inc.
Nomura Asset Management had assets worth $192 billion as of March. LICMF’s assets under management stood at Rs 32,414.92 crore at June-end.