Stock advisory Company, Reliance Nippon Life AMC IPO: Growth option with entry load

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Reliance Nippon Life AMC IPO aims to raise Rs1,542 crore by offering 36.72 million shares at a price band of Rs247-252 apiece

At a time when the growth trajectory of the mutual fund industry is at its best with assets under management (AUM) hitting new highs, it is natural for their promoters to want to unlock value.

Anil Ambani-promoted Reliance Nippon Life Asset Management Co. Ltd is first off the block. The third largest asset management company with AUM of Rs3.62 trillion as of September-end plans to raise Rs1,542 crore by offering 36.72 million shares to investors and dilute close to 10% equity in the process.

The big picture outlook for mutual funds is a factor in the company’s favor. The penetration of mutual funds among households is a measly 2.9% of financial savings and, therefore, the potential is there. Reliance Nippon Life AMC’s prospectus states that the industry is expected to grow at a compounded annual growth rate of 20% over the next four years of which the growth of equity AUM would be faster.