<div><strong>By Sumit Sharma</strong></div><div> </div><div>In the single biggest foreign direct investment in a local mutual fund, Nippon Life Insurance has decided to increase its stake in Reliance Capital Asset Management to 49 per cent from 35 per cent. </div><div> </div><div>Nippon life will thus invest Rs 1,196 crores for the additional 14 percent stake in Reliance Capital Asset Management. Following the investment by Japanese financial services company, Reliance Capital Asset Management gets a valuation of Rs 8542 crores. The mutual fund company will thus be renamed as Reliance Nippon Life Asset Management.</div><div> </div><div>``Together we (Reliance Capital and Nippon Life Insurance) are determined to grow our businesses multifold and have stronger footprint in India and abroad,’’ Anil Ambani, chairman of Reliance Group said. ``Both Reliance Capital and Nippon Life have enjoyed an extraordinary relationship in the last few years and we see this mutual respect and commitment growing stronger with time.’’ </div><div> </div><div>This transaction is expected to be completed within the current financial year, subject to regulatory approvals. As of June 2015, Reliance Capital Asset Management was the country’s largest asset manager with Rs 243,162 crores of funds under mutual funds, pension funds, managed accounts and offshore funds under management. </div><div> </div><div>Investors in India are steadily increasing their exposure to mutual funds on optimism that the Narendra Modi led government will be able to speed up economic growth. Local stocks had flared up from before Modi led the Bharatiya Janata Party to a historic victory in May 2014. </div><div> </div><div>Funds under management with mutual funds have grown rapidly to Rs 13.16 lakh crores as of quarter ended September 2015 from Rs 10.6 lakh crores a year earlier. The rapid increase in funds under management is also prompting mutual funds to increase their size as also number of products and the marketing teams. </div><div> </div><div>This is a far cry from the time when several foreign mutual funds actually exited local partners especially after the 2008 global financial crisis. Among those that moved out of India include Allianz Capital, Morgan Stanley, ING, Daiwa, Pinebridge, Fidelity and Deutsche Bank mutual fund. </div><div> </div><div>India has at present 44 mutual funds. Analysts say the industry and investors would be better served with fewer funds. Of the 44 mutual funds with Rs 13.16 lakh crores, the top 10 funds account for Rs 10.4 lakh crores. The remaining 34 mutual funds may need to increase size to reap better benefits of economies of scale. </div><div> </div><div>Nippon Life Insurance is an over 125 years old insurer and a global Fortune 500 company that manages over US$520 billion (Rs 33.8 Lakh crore) in assets -- amongst the largest total assets in the world for any life insurer. The company is one of the largest life insurers in the world.</div>
