Japanese major financial service Nomura is in plans to sell its stake to mutual fund joint venture along with Life Insurance Corporation (LIC).The investment bank has revealed that the state owned insurer is about to exit from the business of mere fund house to withstand competition from domestic fund industry. Nomura’s walkout from prevailed mutual fund services makes it the sixth financial services firm on a global spectrum.
As of September 2015, Nomura holds35 per cent of stake with LIC Mutual Fund, with overall assets worth Rs 11,157 crore in hand. On other hand LICholds 45 per cent stake with the asset management companies and holds 20 per cent stake in LIC Housing Finance.
There had been stringent decline of assets under management and the LIC Mutual fund eventhough the industry was in boom period at the time it bought stake. On December 31,2009 fund’s dropped from Rs 51,502 crore to Rs 11,157 crore on September 30, 2015,the time when Nomura acquired the stake. Overall AUM of the industry crossed to Rs 7.94 lakh crore.
The Japanesefirm for Rs 308 crore acquired 35 per cent of stake in LIC Mutual Fund.Senior LIC official stated the acquisition resulted after three years and are working on it .The proposal will be subsequently cleared by LIC Nomura board followed by LIC board.
The year 2013 saw many global banks and the asset managers like Deutsche Bank, ING,Morgan Stanley and Daiwa out of the India’s mutual fund industry due to costs associated with garnering assets.While the foreign AMC’s had high cost structure compared to returns quotes Jimmy Patel from Quantum Mutual Fund.