What are Nippon’s (Nippon Life Group) plans for the Indian business?
Nippon Life Insurance has been a strategic partner of Reliance Nippon Life Asset Management Ltd (RNAM) for the last 7 years. Nippon Life made its first tranche of investment of $290 million in 2012, picking up 26% stake in RNAM. Through subsequent investment tranches in 2014 and 2015, Nippon Life Insurance increased its shareholding in RNAM to the current levels. RNAM came out with its IPO in October 2017. The IPO, the first in the asset management industry, was very successful (being oversubscribed by more than 80 times). Nippon Life’s firm belief in RNAM and the position that it enjoys in the Indian financial market led them to sign a definitive agreement and increase their stake in the financial conglomerate. Nippon Life Insurance has shown complete faith and commitment in the leadership team of RNAM.
What expertise would Nippon Life bring to the table?
Nippon Life is a global financial conglomerate with interests in insurance and asset management. It is a Fortune 500 company that manages Rs.49 lakh crore internationally, considerably more resourceful than ADAG. Therefore, the global specialist in the asset management and life insurance space will bring with it huge scale, experience and resources. Moreover, being a global conglomerate, Nippon Life’s risk and asset management practices will further strengthen the Indian fund house. This will add consistency and sustainability of performance to the robust market knowledge and cutting-edge research that RMF is know for. This will further benefit from the increased AUM based on Nippon life’s leadership in Japan, its global relationships and best practices. This will in turn, significantly help enhance capital inflows into India.
Nippon Life has retained the existing management team of RNAM indicating that there will be no fundamental changes. How are you communicating this to distributors?
Reliance Mutual Fund is known in the market as a retail focussed AMC. Our 500 plus strong sales force led by the zonal and segment heads are meeting up with distributors personally to inform them about the change in ownership. Our business easy mobile app, face to face meetings, CEO and fund manager con calls, video conferences and key distributor websites will be the channels through which we plan to communicate this to our distributors.
With the exit of Reliance Capital from RNAM, what will be the impact on brand recognition?
For distributors, AMCs changing partners is nothing new. The industry has seen many such smooth and successful transitions. This one is a simpler one as it involves exit of one of the two JV partners whose stake is being acquired by the other.
However, with the change in ownership and a possible name change soon, we will communicate the key strengths of Nippon Life as a group to the distributor community and the benefits that the global conglomerate will bring onto the table. From an investor point of view, we will execute a multi-media campaign highlighting the new entity and the benefits of continuing their investments with the AMC.
In your opinion, how can distributors grow their business in an all trail era?
The mutual fund industry in India is still at a very nascent stage with less than 2% penetration. However, with no other lucrative investment option available, people have started believing that mutual fund investments are the way to go if they need to generate alpha. AMFI has played its role in getting consumers to believe that mutual funds are the way to go and a key investment option in their consideration set.
The key for distributors to grow their business is to get more and more new investors to come into the category and have a large volume. SIPs are a key to get investors get a flavour of mutual funds and ensure long term wealth creation for them which will also help distributors earn their trail consistently. Therefore, distributors growth is based on 2 key factors: 1. Communicating the benefits of long term investing and 2. Growing SIP book. 3. Acquiring new investors 4. Making them digitally ready
What is your roadmap for the fund house for the next three years?
The next 3 years are the most critical for the company from growth in AUM and a market share perspective. Since the overhang has now been resolved, the first step would be to get back the existing AUM that has been lost considering the headwinds that we have faced. The positive sentiment is already setting in and distributors have been responding warmly. Moreover, being a retail focussed AMC, we will continue our focus on SIP as one of our key drivers for creating wealth for our investors.
RNAM would leverage its strength of approximately 300 locations across the length and breadth of the country to get new investors into the category. Also, the country is going through a digital revolution. With the Prime Ministers focus on a digital India and RNAMs digital culture, our endeavour would be to enable our distributors to be digitally ready making investments convenient for investors.
