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LIC to Sell Stake in MF Arm

The deal is still to fructify, but the Indian insurer is looking to sell to a foreign entity

Well, this factoid went on to become a fact. The Life Insurance Corporation of India has put to rest all speculation after weeks of uncertainty regarding its intent to divest a portion of its holdings in a subsidiary.

The first time this was reported was sometimes in the middle of 2008, when a non-binding memorandum of understanding was signed between Japan-based Nomura Securities, part of Nomura Holdings, which is globally into broking, asset management and investment banking, and the LIC over a stake sale in LIC Asset Management Company.

The insurer has said that it is in talks with the Nomura to sell a stake in its mutual fund arm. According to LIC Managing Director Thomas Mathew, “We are talking to Nomura to sell a stake in our mutual fund arm”.

Wishing not to delve too deep into the matter, he refused to say anything else on the matter. However, market expectations are that the insurer will part with a not inconsiderable stake of between 25-to-35 per cent.

Check out: LIC Fund Facts

That the deal can be rated as a significant one stems from the fact that LIC Mutual Fund is one of the biggest ones in the Indian fund industry. With an average assets under management of Rs 27,344 crore in May, the fund is listed as India’s 8th-largest fund.

The deal may have come to boil at the right time, with the mutual fund industry rising to great heights in 2009 after recording a dismal 2008 – the AAUM of the industry jumped by Rs 87,597 crore in May to Rs 638,592 crore

Check out: LIC Investments

Nomura has been quite serious about its investments in India after departing from the country at one time. Last year in July, it had announced that it will enter the Indian stock-broking business on its own after failing to buy a stake in Enam Securities that would give the Japanese firm majority control.

Check out: LIC Marketshare

Nomura’s presence in India goes way back into the previous century, but it had winded up operations here in the 1990s. More recently, Nomura, in February, had launched its equity investment and banking operations in India.

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