Reliance MF sells 5% to Eton for Rs 501 crore

Deal values ADAG firm at over Rs 10,000 crore

Eton Park, the US-based global multi-strategy investment organisation, has bought 5 per cent equity in Reliance Capital Asset Management. (RCAM), the wholly-owned mutual fund arm of Reliance Capital, for Rs 501 crore. The deal values the Anil Ambani-controlled AMC at over Rs 10,000 crore.

The proposed investment values RCAM at around 13 per cent of its assets under management (AUM).

This is much more than the recent M&A deals in the MF industry. For example, Rebecco Group picked up 49 per cent stake in Canbank Mutual Fund at a valuation which was around 10 per cent of the AUM and UBS bought Standard Chartered MF at 5 per cent of the AUM.

"The RCAM valuation translates into a price of Rs 400 per share of Reliance Capital," said a statement issued by Reliance Capital. The proceeds of the transaction will be utilised by RCAM for its domestic and international expansion.

When contacted, Reliance capital executives said the AMC is already operating in 300 cities across India and is planning a big push in more Tier II and Tier III towns. Besides, it plans to tap the non-resident Indians in several cities in the US, UK and Singapore through more outlets in these countries.

Reliance Capital AMC manages Rs 77,764 crore (as on November) and is the top fund house in terms of AUM.

The transaction is subject to completion of definitive documentation and necessary approvals, if any, and is expected to close in January.

Vikrant Gugnani, president and CEO of Reliance Capital Asset Management, said, "We welcome Eton Park as a respected long term institutional investor, and value this association, given Eton Park's significant global presence in financial markets."

Eton Park is a global, multi-disciplinary, team-oriented investment organisation, dedicated to delivering superior risk-adjusted returns over a multi-year period.

Eton Park currently manages over $10 billion through its offices in New York, London and Hong Kong.

The investment by Eton Park comes at a time when a host of global AMCs have announced their entry into the Indian mutual fund space.

UTI Mutual Fund, the country's oldest mutual fund, is also expected to sell 20 per cent stake to strategic and financial investors ahead of its proposed IPO early next year.

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CAPITAL BOOST

Valuation at 13% of assets under management

AMC valuation translates into Rs 400 per Reliance capital share

Equity proceeds to be utilised for domestic & international expansion

Planning to tap the NRIs in the US, the UK and Singapore