The Anil Ambani-led Reliance Capital and Nippon Life Insurance Group Monday announced two funds for Japanese investors in the Indian equity and bond markets and to jointly start a commercial bank when permission comes from Indian authorities.
The announcement, coinciding with Prime Minister Narendra Modi’s first official visit here, further expands and deepens the relationship between the Indian and the Japanese groups, a joint statement said.
“The prime minister’s visit reinforces the strategic focus of global partnership between India and Japan,” Amitabh Jhunjhunwala, group managing director of the Reliance Group, was quoted as saying in the statement.
“As a good role model of business partnership between Indian and Japanese corporations, Reliance Group and Nippon Life Insurance Group will further expand their collaboration,
which will contribute towards strengthening the relations between India and Japan.”
Part of that goal is the launch of two funds and the announcement to partner in setting up the Reliance Bank as a commercial banking venture in India.
“Reliance Capital is planning to set up its own bank, which will cater to the individual customer and small and medium enterprises all over India.
“Nippon Life is participating in this project as part of strategic business alliance to improve the financial infrastructure and contribute towards economic growth of India”, said Yoshinobu Tsutsui, president of the Japanese life insurance major.
Nissay Asset Management, a part of the group, and Reliance Capital Asset Management has, accordingly, launched two mutual funds — a short term Indian bond fund and the other, an India equity selection fund — both for Japanese retail investors.
“These funds will use the collective expertise of our fund managers to help Japanese and Indian investors invest and gain from growth potential in our countries”, said Sundeep Sikka, chief executive of Reliance Capital Asset Management.
The equity und will directly invest in the Indian share markets to capture the long-term growth prospects of the Indian economy. Its strategy will mirror one of Reliance’s fund schemes with a long and successful track record.
It will have a well diversified portfolio benchmarked to shares that go into the Bombay Stock Exchange BSE-100 index.
The bond Fund will largely invest directly in permitted Indian government securities and local currency Indian Corporate bonds. It will also have the capability to invest up to a limit of 20 percent in offshore foreign currency bonds of large Indian issuers.
This fund can purchase securities with duration of five years.
Both these funds will be managed by Nissay Asset Management Corp, Japan, while Reliance Capital Asset Management will be the investment advisor.
The launch of the two new funds comes close after Reliance Capital launched the first Japanese equity fund in the Indian mutual funds segment, enabling Indian investors to invest in the global Japanese companies.
“Indian markets have grown almost 7 times in last 20 years. However, the Indian investor still has primary investments in domestic bonds and equities,” Sikka said. “Through the Reliance Japan Equity fund we offer our investors a diversified portfolio in the Japanese market and in global Japanese companies.”
Reliance Japan equity fund, he said, will mirror the investment strategies of one of the Nissay Asset Management funds that has outperformed the Tokyo Stock Exchange Stock Price Index in the last five years.
The Japanese life insurance firm, as part of its strategy to enhance investments outside of Japan, has invested substantially in the Indian equity funds since October 2012 and in bond funds since 2013 — both through Reliance Capital.
A Fortune 100 company and the fifth largest private life insurer in the world, Nippon Life Insurance is also the biggest foreign direct investor in Indian asset management and life insurance sector till date.
The Japanese insurer has 26-percent stake in Reliance Capital Asset Management for $290 million and Reliance Life Insurance Company for $680 million in 2011