MUMBAI: Britain’s largest asset management company Schroders has acquired 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.
The Economic Times had written on March 14 that Schroders Investment Management was in talks with Axis Bank to acquiring stake in its mutual fund arm. As part of the deal, Schroders will have one board member each on the AMC’s board and Axis Mutual Fund trustee company.
Schroders Investment Management is a UK-based firm managing $291 billion worldwide. Schroders had applied to the Securities and Exchange Board of India (Sebi) in April 2008 to start a mutual fund business in India, but did not secure a licence till last year. Axis Mutual, which started operations in 2009, has equity assets worth Rs 640 crore. Axis Mutual Fund’s total assets under management (AUM) stood at Rs 8,815 crore as on March 31.
Said Rajiv Anand, managing director & CEO of Axis Mutual Fund, the deal valuation is in line with other deals struck during the year.
“The deal will help us promote our fund products globally through Schroders’ distribution network. Schroders will also bring their products to India,” said Rajiv Anand, managing director and CEO, Axis Mutual Fund.
According to industry sources, the Schroders deal will help Axis Mutual rebrand itself as an investment manager. “Till now, they (Axis MF) were regarded only as a minor offshoot of a large bank; the deal with Schroders will help the fund house to rebrand itself as an investment manager,” said the chief executive of a large asset management company.
Tough business conditions are prompting Indian fund houses to strike partnership deals with stronger foreign institutions that can bring in advisory and investment mandates. In January, 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.
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.
Cash-rich corporate promoted Indian fund houses are also scouting for acquisition targets among asset management companies. Last month, L&T Mutual bought out Fidelity’s India fund business for an undisclosed amount.