Reliance Nippon Life Asset Management IPO opens today

Private life insurance company Reliance Nippon Life Insurance (a 51 percent subsidiary of Reliance Capital) saw a 3 percent increase in its individual new business premium for the quarter ended September 30, 2017 compared to a year ago.

Assets under Management rose by 11 per cent to Rs 17,983 crore at the end of second quarter, Reliance Nippon Life Insurance said in a statement.

At this price, the total amount works out to be Rs 462.67 crore, it added. Investors acquiring shares in the anchor allotment include Fidelity International, Morgan Stanley, HDFC Mutual Fund, SBI Mutual Fund, ICICI Prudential Life, and Bajaj Allianz, among others. When calculated at the upper band of the issue price, the company will be valued at around Rs 15,422 crore.

"We like RNLAM (Reliance Nippon Life Asset Management) as it is the largest AMC with highly diversified product offerings and strong distribution reach", Motilal Oswal Securities Ltd said in an 18 October note.

The IPO size would be around 10 per cent of the post issue paid-up capital of the company.

Jointly owned by Japan's Nippon Life and Reliance Capital, the firm is the asset manager to Reliance Mutual Fund. The public issue will close on October 27. Bids can be made for a minimum of 59 shares and multiples of 59 thereafter.

The offer from the company consists of a fresh issue of up to 2,44,80,000 equity shares and an offer for sale of up to 3,67,20,000 equity shares by promoters - Reliance Capital and Nippon Life Insurance Company. Its proceeds will be used for branch expansion, upgrading technology and advertising, among others. The company will not receive any money from the offer for sale.

The share of mutual funds in net financial savings has risen from 1.35% in financial year 2012 to 2.94% in financial year 2016, the company's draft offer document said, citing data compiled by the ministry of statistics and programme implementation.

Reliance Nippon Life Asset Management is the third-largest asset management company in India, in terms of mutual fund quarterly average asset under management (QAAUM), as of June 30, 2017, according to ICRA. Listing gains and returns by newly-listed companies and the positive sentiment in the broader market are among the reasons attributed to the trend.

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