INTERVIEW-UPDATE 1-Nomura to pay $29 mln for 19 pct LIC MF stake

* Values LIC Mutual at 2.5 pct of May average assets

* Deal part of a plan to sell 35 pct of LIC Mutual to Nomura (Adds quotes, analyst comment, GIC Hsg details, background)

By Nishant Kumar & Tamajit Pain

MUMBAI, June 15 (Reuters) - Japan's Nomura (8604.T) will pay about 1.38 billion rupees ($29 million) to buy 19.3 percent stake in LIC Mutual Fund, part of a deal to acquire 35 percent, a top official of a group firm of the Indian money manager said.

The deal values the fund firm at $149.3 million, or about 2.5 percent of its May average assets of nearly 286 billion rupees. "We have got around 39.3 percent stake in LIC Mutual Fund," R.R. Nair, chief executive of LIC Housing Finance (LICH.BO) told Reuters in a telephone interview on Monday. "Twenty percent we will be holding back. Balance will be offloaded to Nomura."

LIC Housing and LIC Mutual are both units of state-owned Life Insurance Corp of India, the country's largest insurer.

The deal was valued lower than 4-5 percent that many Indian money managers have fetched because more than 90 percent of LIC Mutual's assets were in low margin fixed-income funds, Chintamani Dagade, a senior research analyst at Morningstar India, said.

"Such a valuation would be in line with what the market would be expecting... it looks okay," he said.

Separately, mortgage lender GIC Housing Finance Ltd (GICH.BO) said on Monday its board had approved sale of its entire holding of 11.2 percent in LIC Mutual and 3 percent in LIC Trustee Company for about 890 million rupees.

GIC officials could not be immediately reached for comment but Nair at LIC Housing said the deal was part of a plan to sell 35 percent of LIC Mutual to Nomura to give the Indian money manager access to global markets and strengthen its operations.

"This is to bring in an international player with expertise and exposure," Nair said. "We thought it will benefit the company."

"After the deal, both LIC and LIC Housing (together) will hold 65 percent in LIC Mutual Fund," he said.

LIC Mutual Chief Executive Sushobhan Sarker confirmed holding talks to sell a stake to Nomura, but declined to give details citing non-disclosure agreement.

Nomura Asset Management spokeswoman in Japan also declined comment.

Assets of Indian funds industry have jumped 60 percent to 6.6 trillion rupees in two years, luring the likes of JPMorgan (JPM.N), South Korea's Mirae Asset, Pioneer Global, the fund arm of Italian bank UniCredit (CRDI.MI) and France's Axa (AXAF.PA).

More than 20 firms, including Credit Agricole (CAGR.PA) and UBS (UBSN.VX) are considering to enter India's promising but fiercely competitive fund market forecast by Boston Consulting Group to manage $520 billion by 2015. ($1=47.9 rupees) (Additional reporting by Yuka Obayashi in JAPAN; Editing by Ranjit Gangadharan)