Reliance Nippon Life Asset Management Company's initial public offer is likely to hit the markets by first week of November, sources in know of the development told Moneycontrol.
Anil Ambani-led Reliance Group's asset management arm had filed draft papers with markets regulator Securities and Exchange Board of India to float an IPO on August 18 which is expected to value the company at about Rs 18,000 crore, according to merchant bankers.
This would be the first initial public offering by an asset management company in India, although UTI Mutual Fund IPO have been in the works for a long time.
According to the draft papers filed with SEBI, the public issue of Reliance Nippon Life Asset Management comprises fresh issue of 2,44,80,000 equity shares, besides an offer for sale of 1,12,30,200 shares by Reliance Capital and 2,54,89,800 scrips by Nippon Life Insurance Company.
The IPO size aggregates to 10 percent of the post issue paid-up capital of RNAM.
The proceeds from the fresh issue will be used for setting up new branches and relocating existing branches, upgrading the information technology system, advertising, lending to subsidiary Reliance AIF, investing in new MF schemes managed by the company, funding inorganic growth and meeting expenses towards general corporate purposes.
Generally, asset management companies are valued at 5 percent of AUM, which is likely to give RNAM a valuation of about Rs 18,000 crore. A 10 percent stake sale could fetch Rs 1,800 crore, according to bankers.
RNAM, jointly owned by Japan's Nippon Life and Reliance Capital, is the asset manager to Reliance Mutual Fund with 11.42 percent market share.
It has an asset base of over Rs 3.6 lakh crore, including Rs 2.23 lakh crore for mutual funds.
The company has appointed JM Financial, CLSA, Nomura and Axis Capital as the global coordinators and book running lead managers.
In June, the board of RNAM had approved a proposal to list its shares on the stock exchanges.
RNAM CEO Sundeep Sikka had earlier said that the company initially aims to dilute 10 percent stake by March and further 15 percent over three years as per SEBI norms.
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