Trade regulator Competition Commission of India had approved the acquisition of LIC Mutual Fund and IDBI Mutual Fund. Life Insurance Corporation of India is a sponsor of LIC MF. While IDBI Bank is the sponsor of IDBI Mutual Fund. The Managing Director of LIC Mutual Fund says that he is waiting for some more clarification regarding the merger from the trade regulator. After this, IDBI MF and LIC MF will have to give one month’s exit notice to the investors.
Apart from this, he says that if everything goes well, the merger process will be completed by the end of June or July. Therefore, the merger is expected to be completed by the first half of the current financial year. At the same time, care is being taken at a large level that some things should be done on time and the customers should also be benefited, along with all the rules should be followed.
Know how the merger will happen?
At the end of the last financial year, the Assets Under Management (AUM) of LIC MF was around Rs 17,600 crore and equity including ETF equity was close to Rs 8,000 crore. While the AUM of IDBI MF was less than Rs 4,000 crore at the end of FY23. Those schemes which are generally identifiable with respect to the product portfolio of the merged entity will be merged. IDBI MF will have some schemes which we do not have. We will run them as standalone schemes.
The systematic investment plan (SIP) contribution to its AUM for LIC Mutual Fund currently stands at around 13%, and the mutual fund house is now focussing on increasing the share to around 15-16%. LIC MF currently has a market share of below 0.5% in terms of AUM.
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LIC will increase the number of distributors
How the fund house will use LIC’s vast distribution network to grow its business and footprint. On this, the MD of LIC MF says that many of its distributors are LIC agents and its efforts are sufficient to increase that number. Along with this, 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 more than 50% of these are LIC agents.
Apart from this, importance is given to the recruitment of LIC agents as distributors. While others are also interested in including distributors who only sell mutual funds. LIC has about 45 per cent stake in the fund house. The mutual fund house is not thinking of bringing an IPO ‘immediately’. We do not have any plans to bring IPO in the next 4-5 years. Before thinking of listing ourselves in the stock market, we need to become strong.
The goal is to increase AUM
LIC MF aims to increase its AUM to around Rs 27,000 crore by the end of the current financial year. During FY22, the AMC generated gross sales of Rs 89,485 crore from all live plans. The total number of investors as on March 31, 2022 was 549,971. The average assets under management (AAUM) stood at Rs 18,252 crore for the last quarter of 2021-22 and is ranked 22nd in terms of AAUM in the MF industry.