Japan’s troubled Shinsei Bank and billionaire investor Rakesh Jhunjhunwala are said to be selling out their Indian mutual fund joint venture to Daiwa for about $10 million, as industry profitability erodes on rising competition and regulatory restrictions, two senior bankers familiar with the matter told ET.
The two-year old venture could provide Daiwa, a cross-town rival of Shinsei, a platform to expand in the financial services in a nation of fast-growing middle class. For Shinsei, which sold real estate in Japan to shore up its finances after losses, it may free up resources from a tiny venture to focus on merging with Aozora Bank.
Daiwa Capital Markets, which had raised funds for Indian mutual funds from Japanese investors, can now offer asset management services on its own. Recently, it hired bankers from Credit Suisse and YES Bank to raise business in equity capital markets, private equity and M&A. It plans to double the investment banking team to 18.
“The deal is almost done, it has to now receive regulatory approvals,” said a person privy to the development. Indian mutual fund industry has been losing charm in the past few months, as regulators are cracking down on what is considered unfair practices to get funds.
The Securities & Exchange Board of India, or Sebi, abolished entry loads on mutual fund investments, slowing inflows for asset management companies. Banks, a major source of assets for mutual funds, have been asked to withdraw their money by the Reserve Bank of India.
Aditya Rattan, country head of Daiwa Capital Markets India, declined comment. “We have no comment on this matter,” said James Seddon, group IR & corporate communications division, Shinsei Bank, in an email response.
If the deal goes through, Shinsei, which manages Rs 448 crore of assets in debt and equity schemes, will be valued at about 10% of assets, comparable with previous deals. L&T Finance last December paid Rs 45 crore to buy DBS Cholamandalam Asset Management, a joint venture between Singapore’s DBS and the Chennai-based Cholamandalam.
T Rowe Price bought 26% in UTI Asset Management Company for $135 million, 3.6% of assets. These valuations are a far cry from what Eton Park Capital paid for Reliance Mutual Fund in 2007. Eton paid 13% of assets in December 2007 when equity markets were roaring.
Although the benchmark indices have recouped most of their losses in 2009, the retail investor is yet to hang on to the optimism. New regulations provide no incentive for middlemen to sell mutual fund products, either. Hence, mutual funds have been losing assets.
Outflow from equity schemes continued for the fifth consecutive month, totalling Rs 7,300 crore since August after Sebi’s fiat on entry loads. Banks reportedly withdrew more than one-lakh crore from mutual funds recently.
Freedom Financial, founded by Sanjay Sachdev, the founder CEO of the Principal Group in India, would also sell its stake, but Sachdev would remain with Daiwa. Shinsei, part-owned by investor Christopher Flowers, holds 75% in the asset management company, Mr Jhunjhunwala 15% and Freedom Financial the rest. N Sethuram, former chief investment officer of SBI MF, who had served in Japan for many years as an employee of SBI, is the CIO of the mutual fund.
Source: http://economictimes.indiatimes.com/personal-finance/mutual-funds/mf-news/Shinsei-Jhunjhunwala-may-sell-MF-business-to-Daiwa/articleshow/5451004.cms
The two-year old venture could provide Daiwa, a cross-town rival of Shinsei, a platform to expand in the financial services in a nation of fast-growing middle class. For Shinsei, which sold real estate in Japan to shore up its finances after losses, it may free up resources from a tiny venture to focus on merging with Aozora Bank.
Daiwa Capital Markets, which had raised funds for Indian mutual funds from Japanese investors, can now offer asset management services on its own. Recently, it hired bankers from Credit Suisse and YES Bank to raise business in equity capital markets, private equity and M&A. It plans to double the investment banking team to 18.
“The deal is almost done, it has to now receive regulatory approvals,” said a person privy to the development. Indian mutual fund industry has been losing charm in the past few months, as regulators are cracking down on what is considered unfair practices to get funds.
The Securities & Exchange Board of India, or Sebi, abolished entry loads on mutual fund investments, slowing inflows for asset management companies. Banks, a major source of assets for mutual funds, have been asked to withdraw their money by the Reserve Bank of India.
Aditya Rattan, country head of Daiwa Capital Markets India, declined comment. “We have no comment on this matter,” said James Seddon, group IR & corporate communications division, Shinsei Bank, in an email response.
If the deal goes through, Shinsei, which manages Rs 448 crore of assets in debt and equity schemes, will be valued at about 10% of assets, comparable with previous deals. L&T Finance last December paid Rs 45 crore to buy DBS Cholamandalam Asset Management, a joint venture between Singapore’s DBS and the Chennai-based Cholamandalam.
T Rowe Price bought 26% in UTI Asset Management Company for $135 million, 3.6% of assets. These valuations are a far cry from what Eton Park Capital paid for Reliance Mutual Fund in 2007. Eton paid 13% of assets in December 2007 when equity markets were roaring.
Although the benchmark indices have recouped most of their losses in 2009, the retail investor is yet to hang on to the optimism. New regulations provide no incentive for middlemen to sell mutual fund products, either. Hence, mutual funds have been losing assets.
Outflow from equity schemes continued for the fifth consecutive month, totalling Rs 7,300 crore since August after Sebi’s fiat on entry loads. Banks reportedly withdrew more than one-lakh crore from mutual funds recently.
Freedom Financial, founded by Sanjay Sachdev, the founder CEO of the Principal Group in India, would also sell its stake, but Sachdev would remain with Daiwa. Shinsei, part-owned by investor Christopher Flowers, holds 75% in the asset management company, Mr Jhunjhunwala 15% and Freedom Financial the rest. N Sethuram, former chief investment officer of SBI MF, who had served in Japan for many years as an employee of SBI, is the CIO of the mutual fund.
Source: http://economictimes.indiatimes.com/personal-finance/mutual-funds/mf-news/Shinsei-Jhunjhunwala-may-sell-MF-business-to-Daiwa/articleshow/5451004.cms
Posts
1 comment:
u can get it also here - http://www.radio2fun.com
Post a Comment