LIC in talks with state-run banks for Nomura stake sale

Life Insurance Corporation (LIC) has initiated talks with public sector banks to sell the 35 per cent stake held by its Japanese partner, Nomura, in its mutual fund arm, sources at the insurance behemoth said.

More clarity on the issue is likely to come after the LIC board meeting scheduled for October 28, they said, adding the Corporation does not want to increase its stake in the MF joint venture, LIC Nomura AMC, any further.

The market is abuzz with talks that Nomura India is unlikely to renew its five-year contract with LIC and is planning to completely exit its mutual fund business here.
 

The Japanese firm holds 35 per cent stake in LIC Nomura MF, which had an AUM of a little over Rs 11,157 crore as of September- end, making it the 19th largest player in terms of AUM.

If Nomura exits, the Japanese financial powerhouse will become the 10th foreign fund house to quit the crowded domestic MF market that has now 43 players. US-based Goldman Sachs yesterday announced the sale of its MF business to Reliance Capital AMC.

Nomura is unlikely to renew its contract with LIC in the mutual fund venture, when the five-year term comes to an end early next year, according to sources. LIC as well as Nomura declined to comment on media reports to this effect.

The sources said "LIC, which holds 45 per cent stake in the JV, is in no mood to increase this and therefore has started talking to state-owned lenders for selling the 35 per cent stake held by Nomura." LIC's housing finance arm, LIC Housing Finance, holds 20 per cent stake in LIC Nomura MF.

While a number of state-run banks already have their own mutual fund arms, a few large PSBs like Bank of India, PNB and Central Bank, among others, don't have MF units and hence LIC will first try to woo those lenders, the sources said.

While State Bank of India has partnered with Amundi of France for its mutual fund arm SBI MF, Canara Bank has tied up with the Netherlands' Robeco for its asset management wing, Canara Robeco AMC and Bank of Baroda has partnered with Pioneer Investments.

Early this month, state-run Union Bank of India agreed to buy out the 49 per cent stake in the Belgian fund house KBC from its mutual fund business here Union-KBC Mutual Fund.