Japan's Nomura Group is set to acquire 35 per cent in LIC Mutual Fund, India's seventh largest mutual fund, after the board of directors of Life Insurance Corporation approved a proposal to induct the Japanese financial services major as a strategic partner in the mutual fund business, sources in the state-owned life insurer said.
The insurance company has formed a four-member committee headed by LIC chairman TS Vijayan to decide the valuation of LIC Mutual Fund. Exim Bank chairman T C Venkat Subramanian and GIC chairman Yogesh Lohiya are among the other members.
"Besides the valuation, the committee will also decide the terms and conditions of inducting Nomura Holdings or its subsidiary into LIC Mutual Fund Asset Management Company and LIC Mutual Fund Trustee Company," sources said.
Asked about the deal, LIC managing director Thomas Mathew said, "We are in the middle of the process. Therefore, we cannot give you a timeline." He declined to discuss other details.
As of April 2009, LIC Mutual Fund had assets under management of Rs 24,104 crore (Rs 241.04 billion) over 32 schemes. Industry experts said the asset management company is expected to be valued at around Rs 1,500 crore (Rs 15 billion) or about 6 per cent of AUM, because the equity portion of the fund is just Rs 1,000 crore (Rs 10 billion).
LIC Mutual Fund is likely to be valued on the lines of Standard Chartered Mutual Fund, bought by IDFC for $205 million in March 2008, which amounted to 5.67 per cent of its AUM at the end of February 2008.
One member of the committee said the valuation process has not yet started, and therefore, it would be premature to put a figure to it.
