Japanese securities and banking services group Nomura is expected to buy a 35 per cent stake in LIC Mutual Fund, the asset management arm of India's largest insurance company, Life Insurance Corporation of India (LIC), media reports said.

LIC, the seventh largest mutual fund in India, has already agreed to induct Nomura as a strategic partner and has formed a four-member committee to decide on the valuations and other conditions of stock sale, reports said.

The committee, headed by LIC chairman TS Vijayan, has Exim Bank chairman TC Venkat Subramanian and GIC chairman Yogesh Lohiya as members.

LIC Mutual Fund is expected to be valued at around Rs1,500-1,700 crore ($320mn) or 6 per cent of its assets under management (AUM), the report said.

LIC Mutual Fund reported a 9 per cent growth in its assets under management from Rs24,104 crore in April to Rs28,599 crore in May. Assets under management for the industry as of end of May jumped Rs87,000 crore or nearly 16 per cent from Rs550,000 crore to Rs639,000 crore in May, figures provided by the Association of Mutual Fund of India (AMFI) showed.

At Rs639,000 crore, the average assets under management (AAUM) of mutual funds in the country as of May 2009, is the highest ever for the fund industry.

Taking advantage of the rush among overseas players for a slice of the Indian asset management business, several other mutual funds, including  UTI Asset Management Co, Reliance Capital Asset Management, have sold or are in the process of selling part stakes to strategic investors, mostly foreign funds.