US-based Invesco Ltd, a leading global player in the mutual
fund industry has picked up 49% stake in Religare asset management company
(RAMC) for about Rs 460 crore, valuing the company that has assets under
management (AUM) of Rs 14,600 crore at about Rs 950 crore.
"The deal value is based on 6.4% of the closing AUM at the time of receiving regulatory approval. The fund house is currently managing AUM of Rs 14,600 crore, which is expected to cross Rs 15,000 crore by the time the approval comes," said a top executive of the company.
Invesco is a NYSE listed firm with asset under management of about $670 billion and market capitalisation of $11 billion.
"This investment is a validation of Religare's belief in the long term growth potential of the Indian financial services industry. We believe that both our retail and offshore businesses would be propelled to the next level of their growth journey," said Shachindra Nath, Group CEO, Religare Enterprises Limited. However, he refused to divulged the valuation of the deal.
"Our agreement with Religare will expand the comprehensive range of investment capabilities Invesco provides to our retail and institutional clients around the world, and further position both firms for long-term success," Invesco's President and CEO Martin L. Flanagan said in a statement.
This would be fourth transaction in last nine months in the mutual fund industry sending a strong signal that the Indian mutual fund industry is going through a consolidation phase. Tough business conditions are prompting Indian fund houses to strike partnership deals with stronger foreign institutions or cash- rich domestic companies that can bring in advisory and investment mandates.
This would be the first transaction in the mutual fund industry after market regulator Sebi gave a major relaxation to the mutual fund industry in August this year. Sebi has allowed asset management company to charge additional expense ratio (the charge levied by fund houses towards fund management fees and other expenses) for catering beyond a threshold limit in the smaller cities. It had also decided that service tax would be charged to ultimate investor, not to the AMC.
RAMC's valuation is rich compared to most deals involving domestic mutual funds in recent past. In January this year, Japan's Nippon Life Insurance bought a 26% stake in Anil Ambani-controlled Reliance Capital Asset Management, India's second-largest mutual fund in assets, for roughly Rs 1,450 crore, valuing the fund house at 6.8% of its total assets under management of Rs 82, 305 crore on December 31.
In April his year Britain's largest asset management company Schroders had picked up a 25% stake in Axis Bank-promoted Axis Mutual Fund for an undisclosed amount. The deal will help the Indian fund house access Schroders' global distribution network and advise overseas funds invested in Indian securities. A month before, L&T Mutual bought out Fidelity's India fund business for an undisclosed amount.
In December 2010, Paris-based Natixis Global Asset Management bought a 25% stake in IDFC Mutual Fund at 5.5% of its total assets. Earlier that year, US-based investment management firm T Rowe Price acquired a 26% strategic stake in UTI Asset Management Company for about 3.6% of its assets under management. In June 2010, Japan's Nomura bought a stake in LIC Mutual Fund for about 2.5% of fund's assets.
Religare had acquired the then ailing Lotus Mutual Fund in 2008 and subsequently renamed as Religare AMC. At the time of acquisition, Lotus had just over Rs 5,000 crore of AUM.
"The deal value is based on 6.4% of the closing AUM at the time of receiving regulatory approval. The fund house is currently managing AUM of Rs 14,600 crore, which is expected to cross Rs 15,000 crore by the time the approval comes," said a top executive of the company.
Invesco is a NYSE listed firm with asset under management of about $670 billion and market capitalisation of $11 billion.
"This investment is a validation of Religare's belief in the long term growth potential of the Indian financial services industry. We believe that both our retail and offshore businesses would be propelled to the next level of their growth journey," said Shachindra Nath, Group CEO, Religare Enterprises Limited. However, he refused to divulged the valuation of the deal.
"Our agreement with Religare will expand the comprehensive range of investment capabilities Invesco provides to our retail and institutional clients around the world, and further position both firms for long-term success," Invesco's President and CEO Martin L. Flanagan said in a statement.
This would be fourth transaction in last nine months in the mutual fund industry sending a strong signal that the Indian mutual fund industry is going through a consolidation phase. Tough business conditions are prompting Indian fund houses to strike partnership deals with stronger foreign institutions or cash- rich domestic companies that can bring in advisory and investment mandates.
This would be the first transaction in the mutual fund industry after market regulator Sebi gave a major relaxation to the mutual fund industry in August this year. Sebi has allowed asset management company to charge additional expense ratio (the charge levied by fund houses towards fund management fees and other expenses) for catering beyond a threshold limit in the smaller cities. It had also decided that service tax would be charged to ultimate investor, not to the AMC.
RAMC's valuation is rich compared to most deals involving domestic mutual funds in recent past. In January this year, Japan's Nippon Life Insurance bought a 26% stake in Anil Ambani-controlled Reliance Capital Asset Management, India's second-largest mutual fund in assets, for roughly Rs 1,450 crore, valuing the fund house at 6.8% of its total assets under management of Rs 82, 305 crore on December 31.
In April his year Britain's largest asset management company Schroders had picked up a 25% stake in Axis Bank-promoted Axis Mutual Fund for an undisclosed amount. The deal will help the Indian fund house access Schroders' global distribution network and advise overseas funds invested in Indian securities. A month before, L&T Mutual bought out Fidelity's India fund business for an undisclosed amount.
In December 2010, Paris-based Natixis Global Asset Management bought a 25% stake in IDFC Mutual Fund at 5.5% of its total assets. Earlier that year, US-based investment management firm T Rowe Price acquired a 26% strategic stake in UTI Asset Management Company for about 3.6% of its assets under management. In June 2010, Japan's Nomura bought a stake in LIC Mutual Fund for about 2.5% of fund's assets.
Religare had acquired the then ailing Lotus Mutual Fund in 2008 and subsequently renamed as Religare AMC. At the time of acquisition, Lotus had just over Rs 5,000 crore of AUM.
Source: http://economictimes.indiatimes.com/personal-finance/mutual-funds/mf-news/us-based-inveso-picks-up-49-stake-in-religare-amc-for-a-tad-below-rs-450-crore/articleshow/16568230.cms
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