Reliance Nippon Life Asset Management IPO is over-subscribed 81.37 times – Institutional investors – 118 times, HNI — 210 times, and Retail – 5.35 times
Reliance Asset management is third largest mutual fund company in India.
Issue Details of Reliance Mutual Fund IPO:
- IPO Open: 25th Oct – 27th Oct 2017
- Issue Price band: Rs 247 – Rs 252
- Issue Size: Rs 1540 crore
- Market lot: 59 shares
- Minimum Investment: 14868 (Rs 252 per share)
- Max Investment for Retail Investor – 767 shares
- Book Running Lead Managers: Axis Capital
- Registrar: Karvy
- Listing: BSE/NSE
IPO Issue Allocation:
- Qualified institutional buyers (QIBs) – 75% of the offer.
- Non-institutional bidders – 15% of the offer.
- Retail individual bidders – 10% of the offer.
Reliance Nippon Life Asset Management Limited (formerly Reliance Capital Asset Management Limited)(RNAM) is the asset manager of Reliance Mutual Fund (RMF).
- Reliance Capital Limited is one of India leading and fastest growing, RBI registered Non-Banking Finance Company (NBFC). and has its business interests in Asset Management, Life Insurance, General Insurance, Private Equity, Proprietary Investments, Stock Broking, & other activities in the Financial Services Sector.
- Nippon Life Insurance Company (NLI) is a Japan leading private life insurer and offers a wide range of financial products, including individual and group life and annuity policies through various distribution channels, mainly using face-to-face sales channels for its traditional insurance products.
Reliance Asset management is third largest mutual fund company in India after ICICI Pru & HDFC MF.
The list of the top shareholders of the company and the number of equity shares held by them is as below:
Objective of the issue:
Out of the totla issue, 40% is fresh issue and 60% is OFS portion.,
– To achieve the benefits of listing the equity shares of the company on the stock exchanges
– Carry out the sale of 8,62,47,187 equity shares by the selling shareholders. The company will not receive any proceeds from the offer for sale.
Valuation as compared to its peers:
At the upper price band (Rs 252) , the total market cap will be Rs 15422 crores which will mean the PE ratio of 37x (based on FY2017) and 34x (basedo n FY2018E).
Should you invest: The company’s profitability is average as the equity fund business market share is low. Also, ADAG group shares has not performed well in the past. So I will personally avoid this issue.
Despite above, this IPO is expected to generate some interest as this is first IPO for an AMC.