Reliance Nippon Life Asset Management Information Note

Premia Research Issue Opens: October 25, 2017 Issue Closes: October 27, 2017 Price Band: ` 247-` 252

This document summarizes a few key points related to the issue and should not be treated as a comprehensive summary. Investors are
requested to refer the Red Herring Prospectus for further details regarding the issue, the issuer company and the risk factors before taking any
Recommendation investment decision. Please note that investment in securities is subject to risks including loss of principal amount and past performance is not
indicative of future performance. Nothing herein constitutes an offer of securities for sale in any jurisdiction where it is unlawful to do so.
Not Rated
This document is not intended to be an advertisement and does not constitute an invitation or form any part of any issue for sale or solicitation
of an offer to subscribe for or purchase any securities and neither this document nor anything contained herein shall form the basis for any
Issue Details contract or commitment whatsoever.

Face Value: `10 Company Overview

Public Issue 612 lakh Shares  Reliance Nippon Life Asset Management (RNLAM) is one of the largest asset
Employee Reservation - management companies (AMC) in India, managing total AUM of `3.6 lakh crore as of
Price Band : `247-252 June 30, 2017.
Issue Size# ~`1,542 Cr  The Company is involved in managing 1) mutual funds (MF, including ETFs); 2)
Bid lot 59 Equity shares
managed accounts, including portfolio management services, alternative investment
funds (AIFs) and pension funds; and 3) offshore funds and advisory mandates.
Issue Type: 100% Book building
Post Issue Market Cap#: ~` 15,422 Cr; Note: # - at upper band
 According to ICRA RNLAM (is/was/has) –
o Ranked the third largest AMC, in terms of MF quarterly average AUM
% Shareholding Pre IPO (QAAUM) with a market share of 11.4%, as of June 30, 2017.
Promoter 96 o Ranked the second most profitable AMC in India in FY16.
o Highest total MF monthly average AUM (MAAUM) among all AMCs in India
Public 4
Source: RHP
from beyond top 15 (B-15) locations as of June 30, 2017.
o Second highest retail MAAUM in India as of June 30, 2017.
Share Reservation % of Issue o 18.6 Lakh SIP accounts with monthly inflows of ~`510 Cr (June 30, 2017).
QIB 50 Offer Details
NII 15 The offer consists of fresh issue of up to 244.8 lakh shares aggregating up to
Retail 35 `605/`617Cr at lower/upper end of the price band and Offer for Sale of up to 367.2 lakh
shares by selling shareholders Nippon Life Insurance Company and Reliance Capital
Company Management Limited.
Sundeep Sikka ED & CEO The proceeds from the issue will be utilized towards – Setting up new branches and
Prateek Jain CFO relocating certain existing branches (`38 Cr); Upgrading IT systems (`41 Cr); Advertising,
marketing and brand building activities (`72 Cr); Lending to company’s Subsidiary
(Reliance AIF) for investment of continuing interest in the new AIF schemes managed by
Issue Managers Reliance AIF (`125 Cr); Investing towards company’s continuing interest in new mutual
IIFL Holdings, Axis Capital, JM fund schemes managed by the company (`100 Cr); Funding inorganic growth and
Financial, CLSA India, Nomura
BRLMs
Financial, Edelweiss Financial, SBI
strategic initiatives (`165 Cr); and General corporate purposes.
Capital and Yes Securities Key Positives
Registrar Karvy Computershare Pvt Ltd. RNLAM has largest total MF MAAUM from smaller cities and towns, second most
profitable AMC in FY16 and third largest MF in terms of QAAUM. Its total revenues and
PAT has increased by a CAGR of 18.2% and 15.0%, respectively over FY13-17.
Financial Summary
Analysts: Milan Desai Consolidated `Cr. FY15 FY16 FY17 Q1FY18*
E-mail: research@iifl.com Revenue from operations 847 1,200 1,307 364
YoY growth (%) 25.4 41.6 9.0 --
October 13, 2017
Profit Before Tax 464 522 581 130
Reported PAT 354 396 403 88
EPS‐ Diluted (`) 6.3 6.8 6.9 1.5
RoE (%) 23.1 22.1 21.3 --
Source: Company, IIFL Research; * Q1FY18 figures are not annualized
*For additional information and risk factors please refer to the Red Herring Prospectus. Please note that this document is for information purpose only.
 Reliance Nippon Life Asset Management
Premia Research

Key Points

Leading Asset Management Company with Strong Credentials to Drive Growth

RNLAM is the third largest AMC in India, in terms of MF QAAUM, as of June 30, 2017,
according to ICRA report. It has strong relationships with distributors and investors,
consisting of individual (retail and HNIs) and institutional investors. Report further states,
RNLAM has a diversified investor base wherein it manages asset for 70.1 lakh investor
folios, which comprised 67.2 lakh retail folios. The MAAUM of retail investors managed by
it was the 2nd largest (with a total market share of 13.6%) among asset management
companies in India, according to ICRA. Furthermore, its branches are spread across 145
districts in India.
77 of the S&P BSE 100 companies have invested with RNLAM as of June 30, 2017 and the
company also managed assets for other small, medium and large corporates in India.
QAAUM, total revenues and profit after tax have increased by a compound annual growth
rate of 22.2%, 18.2% and 15.0%, respectively over FY13-17. According to ICRA, the
company had the highest net worth among the top five AMCs based on AAUM in India, as
of March 31, 2016.
Multi Channel Distribution Network
RNLAM has strong presence across India, has set up subsidiaries in Singapore and
Mauritius and a representative office in Dubai. In India, the company has a pan-India
network of 171 branches, of which 132 branches are located in B-15 locations and
approximately 58,000 distributors as of June 30, 2017. Its distributors comprise IFAs,
foreign banks, Indian private and public sector banks, broking companies, national
distributors and digital platforms. The company intends to continue to strengthen its
relationships with IFAs which allows it to reach investors in remote areas. The company’s
access to large and diversified distributor base has enabled it to build long-term retail
assets and none of its distributors account for over 4% of AUM, as of June 30, 2017.
The MAAUM of retail investors managed by it was ~` 58,400cr, which was the 2nd largest
among AMCs in India according to ICRA. Further, it had the highest total MF MAAUM
among all AMCs in India from beyond top 15 locations, as of June 30, 2017.

Key Risks

Macroeconomic Conditions in India

Macroeconomic conditions in India are likely to affect the performance of funds managed
by the company, which may in-turn affect AUM managed by it, its management fees and
revenue.
Increase in competition
Competition from existing and new market participants offering investment products
could reduce the company’s market share or put downward pressure on its fees.
 Premia Research
Disclaimer
Recommendation Parameters for Fundamental/Technical Reports:

Buy – Absolute return of over +10%

Accumulate – Absolute return between 0% to +10%
Reduce – Absolute return between 0% to -10%
Sell – Absolute return below -10%

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in the capacity of a Book Running Lead Manager and a Syndicate Member to the Issue. However IIFL Holdings Limited and India Infoline Limited shall not be in any way
responsible for the contents hereof, any omission therefrom or shall be liable for any loss whatsoever arising from use of this document or otherwise arising in connection
therewith, including with respect to forward looking statements, if any. Neither IIFL Holdings Limited nor India Infoline Limited or any of its affiliates, group companies,
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arise from or in connection with the use of the information.

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