Japanese financial services group Nomura has agreed to pick up a 30.5 per cent stake in LIC Mutual Fund for around Rs 227 crore. The deal values the Indian company at over Rs 700 crore.
The Japanese firm plans to take its stake up to 35 per cent, Mr R. R. Nair, Director and Chief Executive, LIC Housing Finance, told Business Line.
LIC HF, which holds 39.3 per cent stake in LIC Mutual Fund, will sell 19.3 per cent to Nomura for Rs 138 crore, while GIC Housing Finance will sell its entire 11.2 per cent stake for Rs 89 crore.
Initially Nomura will directly subscribe to LIC for a small equity stake in LIC MF following which LIC Housing Finance and GIC Housing Finance will sell their stakes to take the Nomura stake to 35 per cent.
Post the deal, the LIC group would continue to have management control of LIC MF, with LIC holding a 45 per cent and LIC HF a 20 per cent stake.
The group as a whole was looking for a foreign partner with expertise and international exposure that will benefit the mutual fund company, Mr Nair said. Nomura fitted the bill, he said.
.The deal will also reveal the hidden value of the unlisted LIC MF, according to Mr Nair. The actual book value of LIC MF is Rs 1.93 crore.
In an announcement to the BSE , LIC HF said it will sell 1730 equity shares of LIC MF AMC of face value Rs 10,000 each; and 2,000 equity shares of LIC MF Trustee Company of face value Rs 10 each. LICHFL Care Homes, a 100 per cent subsidiary of LIC HF, will sell its entire holding of 1200 equity shares of LICMF Trustee Co .
GIC Housing Finance said it is considering selling its entire holding in both LIC as well as in LICMF Trustee Co. LIC MF had average assets under management of Rs 28,599 crore as at end May 2009.
Source: The Hindu Businessline