Reliance Capital gets RBI nod for mutual fund biz stake sale

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The Reserve Bank of India has approved Anil Ambani-led Reliance Group's Rs 1,450-crore stake sale in its mutual fund business unit to Japan's Nippon Life.

The diversified conglomerate's financial services arm Reliance Capital is selling 26 per cent stake in RCAM (Reliance Capital Asset Management Company) to Nippon Life for Rs 1,450 crore -- making it the largest ever Foreign Direct Investment (FDI) in the Indian mutual fund space.

Sources said that RBI has cleared the deal, bringing it a step closer towards its completion. The transaction has already been cleared by the Competition Commission of India (CCI) and might be completed soon after achieving a couple of more remaining regulatory approvals, they added.

"We have no objection to your company transferring 26 per cent of the issued and paid-up equity shares in RCAM to Nippon Life," RBI communicated to the company in a letter dated June 7, 2012.

The Nippon Life transaction values RCAM, the country's most profitable fund house, at about Rs 5,600 crore.

The final agreements for this deal was signed in late March this year.

Reliance Capital has already completed another deal with Nippon Life, wherein the Japanese financial services giant has acquired 26 per cent stake in Reliance Life Insurance for Rs 3,100 crore, valuing the life insurance venture at about Rs 11,500 crore.

For the last fiscal ended March 31, 2012, RCAM posted a net profit of Rs 276 crore, retaining its position as the country's most profitable fund house for the second year.

The company's profit after tax grew by over five per cent from Rs 261 crore in the previous fiscal 2011-12. Its profit before tax also grew by five per cent to Rs 308 crore in the fiscal ended March 31, 2012.

Reliance Capital AMC (Asset Management Company) had overtaken HDFC AMC as the country's most profitable fund house during the previous fiscal 2010-11 and has managed to retain its leadership position.

Reliance Capital Asset Management managed Rs 1,40,853 crore (USD 27.5 billion) as on March 31, 2012, across mutual funds, pension funds, managed accounts and hedge funds.

Reliance Mutual Fund figures among the top two mutual funds in India, in terms of AUM, with market share of nearly 12 per cent and its average AUM stood at Rs 78,112 crore for the period ended March 31, 2012.