Setting a new benchmark in mutual fund industry, Reliance Capital Asset Management Company (RCAM), the largest mutual fund in the country, has divested 5 per cent stake to the UK-based Eton Park for Rs 501 crore. At this price, it is being valued at a huge Rs 10,000 crore. The proposed investment values RCAM at around 13 per cent of its assets under management (AUM).
Reliance mutual fund currently has Rs 77,765 crore in assets under management and has an investor base of over 42 lakh. Of this, around Rs 25,000 crore is in equity funds, while the remaining Rs 52,775 crore is in debt funds. Industry experts feel that the deal could be a prelude to a listing in the next 3-5 years. RCAM's valuation translates into a price of Rs 400 per share of Reliance Capital, the holding company of RCAM.
The investment is a reflection of the India growth story, particularly in the financial markets. Until now all deals in the mutual fund industry had been concluded at less than 7 per cent of AUM. In 2005, BNP Paribas acquired a 49.9 per cent stake in Sundram Asset Management Company, which had an AUM of Rs 2,870 crore at Rs 100.4 crore.
“The proceeds of the transaction would be utilised by RCAM for domestic and international expansion. The mutual fund plans to reach out to 1,000 towns in he next 18-24 months. Currently, it operates in 300 towns and cities," said a senior official of Reliance Capital.