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