Reliance Nippon Life Asset Management Lt will use the proceeds from its initial public offering (IPO) of around Rs 165 crore for acquisitions and expanding the distribution network, a senior company official said on Monday.
Arun Sundaresan, Head - Product Management Group, Reliance Nippon Life Asset Management, told reporters in Chennai that the company may launch three or four new schemes while it may have to merge four funds to abide by the Securities and Exchange Board of India's (SEBI) circular on rationalisation of mutual fund schemes.
Reliance Nippon Life Asset's IPO opens on October 25, 2017 and closes on October 27.
The IPO consists of 61, 200, 000 equity shares comprising a mix of fresh issue and an offer for sale.
The price band is fixed at Rs 247 to Rs 252 per equity share and the offer constitutes 10 per cent of the post - offer paid - up equity share capital of Reliance Nippon Life Asset.
"The IPO proceeds will be used for inorganic growth and also for expansion of branch network, " Sundaresan said.
As per the Red Herring Prospectus, the company plans to utilise Rs 165 crore for inorganic growth by 2021.
The avenues where the net proceeds of the IPO would be invested by Reliance Nippon Life Asset are: setting up new branches and relocating certain branches (Rs 38. 3 crore); upgrading information technology systems (Rs 40, 6 crore); advertising, marketing and brand building (Rs 72 crore); lending to subsidiary (Reliance AIF) for investment of continuing interest in new AIF schemes managed by Reliance AIF (Rs 125 crore); for investment of continuing interest in new mutual fund schemes managed by the company (Rs 100 crore) and to meet the issue expenses.
Queried about the Securities and Exchange Board of India's (SEBI) circular on rationalisation of mutual fund scheme and its impact on Reliance Nippon Life Asset, Sundaresan said the company may launch three or four new schemes while it may have to merge four funds.
"The SEBI has categorised under different heads the mutual fund schemes.
As a result we may look at three - four new categories.
On the other hand two equity funds and two debt funds may need to be merged as a result of the circular. "
On October 6, 2017, SEBI in a circular said there is a need to clearly distinguish different schemes launched by a mutual fund in terms of asset allocation, investment strategy and others.
"A need has also been felt to bring uniformity in the characteristics of similar type of schemes launched by different Mutual Funds so that an investor finds it easier to compare similar funds, " SEBI said in a statement.
In Kolkata, the company's Business Head (Distribution) Saugata Chatterjee said Reliance Nippon Life Asset made a profit of Rs 405 crore in 2016 - 17 and that the issue size would be around Rs 1, 500 crore.
The company, formerly Reliance Capital Asset Management Limited, is the asset manager of Reliance Mutual Fund.
Presently, Reliance Capital Ltd holds 46. 57 per cent stake in the company while Nippon Life Insurance Company (NLI) holds 49 per cent.
Post IPO, both the promoters would hold 42. 88 per cent each.