Monday, January 30, 2012

Fidelity in talks to sell India mutual fund business-report

  • Fidelity seeking a valuation of $202 million - report
  • Large number of MFs including Goldman Sachs unit likely to bid
  • Fidelity managed assets worth $1.8 billion as of end-Dec
Fidelity Investments is in talks to sell its India mutual fund business and is seeking a valuation of 10 billion rupees ($202 million) for the unit, a report on the Economic Times website said citing a person with direct knowledge of the development.

Fidelity's India fund management arm, which was launched in 2004, may attract interest from a large number of fund houses including Goldman Sachs' asset management unit, said the report.

Advisors representing Fidelity circulated a "request for proposal" to companies interested in buying the asset last week, it said.

The fund manager may retain a small team in India that will advise investors on its India-focused offshore funds, the report said.

A spokesman for Fidelity's asset management arm in India did not immediately respond to a mail from Reuters seeking comment.

Fidelity managed assets worth about 88 billion rupees ($1.8 billion) as of end-December 2011, according to data from the Association of Mutual Funds in India, making it the 15th largest company in India's competitive asset management business.

The company's average assets under management has slightly fallen from 91 billion rupees at the beginning of the last year, the data showed, with India's main market index posting a drop of nearly 25 percent in 2011.

Assets managed by fund managers in India rose to 5.9 trillion rupees ($119 billion) as of March 2011 from 2.3 trillion in March 2006, according to a study by research and consultancy company PricewaterhouseCoopers.

Lured by the long-term prospects of Asia's third-largest economy, overseas fund managers, such as U.S.-based T. Rowe Price Group Inc and Fidelity, have been buying into Indian money managers or setting up operations on their own.

Nippon Life Insurance earlier this month agreed to pay $290 million for a 26 percent stake in the asset management unit of Indian financial services provider Reliance Capital Ltd .

Wall Street bank Goldman Sachs last year bought India's Benchmark Asset Management Co, which managed about $700 million in assets at that time.

However, the sharp fall in the equity markets and the recent regulatory changes such as the removal of the entry load, or a commission charged by a mutual fund distributor for selling a product, has added to the competitive pressure in the sector.


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