‘We’re fo­cused on get­ting sticky as­sets; aim to de­liver con­sis­tent per­for­mance’

Business Standard - - THE SMART INVESTOR -

SUN­DEEP SIKKA, chief ex­ec­u­tive of­fi­cer (CEO) of Re­liance Nip­pon Life As­set Man­age­ment (AMC), says the com­pany has been con­sciously mov­ing its as­set mix to half debt and half eq­uity as eq­uity as­sets tend to be cycli­cal. The AMC is not ag­gres­sively com­pet­ing for mar­ket share but is fo­cussed on growth with prof­itabil­ity, he tells Ash­ley Coutinho & Samie Mo­dak. Edited ex­cerpts: tends to be cycli­cal.

We have been fo­cus­ing on growth with prof­itabil­ity. We are also not ag­gres­sively com­pet­ing for mar­ket share. In the past four years, our rev­enues have in­creased and our blended yield has come down. If you see the last one decade, when eq­uity has done well only for three or four years, our profit in 2007 was ~75 crore, while in 2017 it stood at ~580 crore. So, it de­pends on how you want to de­velop your busi­ness model. We are very clear we don’t want to go just af­ter scale and size. How’s the as­set man­age­ment busi­ness other than MF help­ing you? Nearly 85 per cent of our rev­enues come from MFs. From a long-term point of view, we have core and non-core busi­nesses. The lat­ter can be an engine of fu­ture growth. The off­shore funds we are launch­ing are mir­ror im­ages of our ex­ist­ing funds and there­fore, we don’t have to spend any­thing ex­tra. So op­er­at­ing lever­age will be high for the non-core busi­ness. The AMC’s eq­uity per­for­mance has not been ex­cep­tional in the past year. What are your thoughts? Our en­deav­our is to fea­ture among the top-quar­tile funds, but at the same time we are not aim­ing to be num­ber one or num­ber two all the time. That is not sus­tain­able. In­stead, the fo­cus is on de­liv­er­ing a sta­ble, long-term and con­sis­tent per­for­mance. Be­sides, we have a large num­ber of in­vestors putting money through SIPs. This is es­sen­tially sticky money and th­ese in­vestors won’t be switch­ing funds just be­cause a par­tic­u­lar scheme lags in per­for­mance for a quar­ter or two. How will the share­hold­ing pat­tern of the AMC change af­ter list­ing? Both Nip­pon Life In­sur­ance and Re­liance Cap­i­tal will con­tinue to re­main equal share­hold­ers in the AMC af­ter the list­ing, ac­cord­ing to the share­hold­ers agree­ment. Nip­pon Life sees the as­set man­age­ment as a core busi­ness and they re­main com­mit­ted to it from a long-term per­spec­tive.

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