EPFO clears RIL-Nippon Life deal amid trade union red flag

The central board of trustees of the Employees' Provident Fund Organisation (EPFO) on Tuesday approved Reliance Capital Asset Management Ltd's plan to sell a 26% stake to Japanese insurer Nippon Life, amid objection from some of the trade union members.

Last year, EPFO appointed Reliance AMC, State Bank of India, HSBC Asset Management (India) Private Ltd and ICICI Securities Primary Dealership Ltd as fund managers with a rider that companies have to take written permission for any mergers, takeover or stake sale. Reliance's proposal was shot down in the previous meeting in May and that delayed the R1,450-crore stake sale to Nippon.

''Reliance AMC was selected via an open bidding system. One of the condition was that if there is any change in pattern of shareholding, the company has to take the approval of CBT. This proposal (stake sale to Nippon) has been allowed as it does change the structure of the company,'' Central Provident Fund Commissioner RC Mishra told reporters after a meeting of CBT.

Some of the labour union members objected to the proposal of foreign company picking up a stake in a company that manages workers retirement money.

"The Ambani family have 80% stake in the AMC. After selling 26% to Nippon, the shareholding of the promoters will come down to 54%. If they sell another 5% stake, the Indian promoters will lose majority status and there could be change in the strategy of managing the EPF fund, which may go against the interest of the workers," said BM Rai, general secretary of BJP-backed Bhartiya Mazdoor Sangh and a member of CBT.

But EPFO officials justified the move saying that Reliance AMC will continue to remain an Indian entity after the 26% stake sale. Moreover, EPFO has already allowed an asset management company owned by foreign bank HSBC as a fund manager.

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