Interesting news for all the investors in Reliance mutual funds- Nippon India. Anil Ambani’s who owns the Reliance group sold its entire shareholding in the mutual fund business to its joint venture partner Nippon Life. The name change was declared at an event held in Mumbai on October 7. The AMC of reliance group is now combined with Nippon India and from now Nippon funds will invest in the Reliance on mutual funds.
Nippon Life is a 130-year-old financial assistance conglomerate. There is a positive kind of experience that they bring into existence with Reliance, this will be a positive structure for the future of reliance.
Your investments in Reliance Mutual Funds in a portfolio will now appear following the name of Nippon India Mutual Fund with other traits remaining unchanged.
On September 27, Nippon Life Insurance took a 75% percent stake in RNAM from Reliance Capital for about Rs 6,000 crore. With this latest deal, Nippon Life’s total gross investment for the RNAM stake is now up to Rs 7,800 crore, with the largest FDI inflows into India in the financial services sector. A few years back Reliance use to lead in assets under management but has shifted to the 5th spot as institutional investors pulled out their money with the troubled company. Nippon enters the reliance AMC at first buying a 26% stake in 2012 and now has 75% making it the single largest shareholder in the company into their global consolidated asset management fold.
Being a global player, Nippon will help the AMC secure global mandates for fund management and development costs in the long run. It manages assets worth above $700 billion. The deal benefited Anil Ambani Group to repay the AMC’s bond exposure of ₹420 crores. Having become the single sponsor of the AMC, Nippon Life Insurance plans to hold the management team to reclaim the lost market share.
“There is no change in the fund management team”- The Investors can relax following the future of their schemes. The mutual fund schemes will remain under the same management team that has been leading all over the years. If there will be any change the investor will be updated and will be given away to exit the scheme. With this integration, the company will focus on recovering its market share and enhance profitability.
The extension in the form of security of the promoter entity of the company is above and the new owners will work for better. It will result in more favorable risk-adjusted returns for unitholders and minority shareholders of the company too, as it will bring the best talent to run the business.
Nippon is expected to bring in more products to Indian markets that will benefit Indian investors to invest overseas over asset classes. It should also bring in different investment strategies that will improve the risk-adjusted returns for Indian investors. While the new products and new investment plans may develop the number of investment options for Indian investors, there will be a qualitative improvement too.
It’s expected that the Nippon Life will bring in an extra layer of global risk management systems and investment management methods to the Indian business. Practical implementation of this can enhance the risk-adjusted returns for the Indian investors.
The help of Nippon Life’s global network will benefit the company to expand. The Nippon will also make an open offer of RNAM stake to public shareholders at Rs 230 per share, which will be as per the market governing norms.
For all the Reliance Mutual Fund investors it’s suggested to give a chance to the Nippon to bring better investment schemes for you, it would be advisable for you to continue to your investments for now.
Just stay invested! If your scheme is underperforming, put it on a watchlist and decide after 6 months or a year, depending on how long it has been down. If your schemes are not underperforming its peers or benchmark, stay invested and see the scheme for a year.