LIC MF sees merger with IDBI MF being completed in H1
LIC Mutual Fund expects the proposed merger between it and IDBI Mutual Fund to be completed by the first half of this fiscal.
Fair trade regulator Competition Commission of India (CCI) in March this year approved LIC MF’s acquisition of IDBI MF. State-run insurer Life Insurance Corporation of India (LIC) is the sponsor of LIC MF, while IDBI Bank is the sponsor of IDBI MF.
“We are waiting for some more clarifications (regarding the proposed merger) from the regulator. Then, IDBI MF and we will have to give a one-month exit notice to the investors. We see the completion of the merger happening may be at the end of June or July, if everything goes well. So, hopefully, by the first half of the current fiscal, it should happen,” LIC MF managing director & CEO TS Ramakrishnan told FE.
“On a major level, we are taking care that things happen in time and customers are also benefited, as well as that we abide by all the regulations,” Ramakrishnan said.
At the end of last fiscal, LIC MF’s assets under management (AUM) stood at around Rs 17,600 crore and of this, equity, including ETF equity, was close to Rs 8,000 crore. IDBI MF’s AUM was below Rs 4,000 crore at the end of FY23.
With regard to the product portfolio of the merged entity, schemes that can be commonly identified would be merged. “Wherever we have gaps (in product portfolio), these will be filled with some of the products that IDBI MF would have. Schemes that can be commonly identified will be merged. IDBI MF would be having some schemes which we don’t have; we will run those as standalone schemes,” Ramakrishnan informed.
For LIC Mutual Fund, the systematic investment plan’s (SIP) contribution to its AUM is currently around 13%, and the mutual fund house is now focusing to increase the share to around 15-16%, which has been the industry average, within the next two-three years.
In terms of AUM, at present, LIC MF’s market share stands at below 0.5%.
On how the fund house will leverage LIC’s huge distribution network to grow its business and footprint, Ramakrishnan said many of its distributors are LIC agents. And its efforts are to increase that number. At the same time, the company is also trying to increase the number of its distributors who are not LIC agents.
LIC MF has around 45,000 distributors, and of these, more than 50% are LIC agents. “While we give importance to recruiting LIC agents as our distributors, at the same time we are also interested in onboarding other distributors who are selling only mutual funds,” the MD said, adding the mutual fund house’s active distributors could be around 7,000 at present.
LIC holds around 45% in the fund house.
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The mutual fund house is not looking to go for an IPO “immediately”. “In the next, say, 4-5 years, we have no plan. We need to become stronger before we think of listing ourselves,” said Ramakrishnan.
LIC MF has a target of increasing its AUM to around Rs 27,000 crore at the end of the current financial year.
During FY22, the AMC had mobilised gross sales of Rs 89,485 crore from all live schemes. The total number of investors as on March 31, 2022 stood at 549,971. Average assets under management (AAUM) were at Rs 18,252 crore for the last quarter of 2021-22 and it ranked 22nd in terms of AAUM in the MF industry.