DSP, Mirae join race for IDFCAMC
After banks and private equity players, two more entities — the DSP Group and Mirae Asset Global Investments (India) — have thrown their hats in the ring to acquire IDFC Asset Management Company (AMC).
The DSP Group is one of the oldest financial services firms in India and is headed by veteran investment banker Hemendra Kothari. Notably, DSP Group has also separately entered into talks to sell its 60 per cent stake in DSP BlackRock to its joint venture partner BlackRock.
DSP BlackRock is among the top 10 fund houses in the country and managed assets worth about ~860 billion in March 2018. BlackRock is the world's largest asset manager with over $6 trillion in assets under management (AUM).
It is not yet clear if DSP and BlackRock will enter a non-compete agreement if a split in their joint venture materialises.
“We do not comment on speculation,” DSP BlackRock said in an emailed response. Kothari did not respond to a text message sent to him.
Mirae Asset Global Investments (India), another contender for IDFC MF, has stepped up its India focus and recently announced its entry into the alternative investment and investment banking space. Mirae Asset MF currently manages five equity and four debt funds with an overall AUM of over ~170 billion.
“IDFC MF would be a good fit for Mirae, considering the former is a strong debt player while the latter is predominantly an equity fund house,” said an industry expert.
“We have completed the first phase of our business in India… and set up a sustainable business model,” Swarup Mohanty, CEO, Mirae Asset Global Investments (India), had said in April on the company completing 10 years in the country. In phase two, we want to graduate from being known as an equity-based fund house to one L&T Finance SBI MF
HDFC MF Birla Sun Life MF Kotak MF Pramerica MF
Reliance MF Edelweiss MF Fidelity Daiwa MF ING MF DIneduitascahseseMtsF's Goldman Sachs MF JP Morgan MF demonstrating strength in all asset classes, he had said.Mirae Asset declined to comment. IDFC MF is reportedly in talks with IndusInd Bank and Yes Bank as well as private equity players such as Bain Capital and Warburg Pincus. The AMC is looking a valuation of ~40-45 billion for the fund house. With total assets of 2012 2013 2015 about ~700 billion, the AMC is currently ranked 11 in terms of the assets it manages.
“IDFC has been open to strategic partners like we have had in the past, which can help add value to our successful and growing AMC. The business continues to focus on serving the needs of our customers, and we are committed to creating value for all stakeholders,” an IDFC spokesperson said.
Historically, deals in the Indian asset management space have happened at 5-6 per cent of AUM. However, arriving at reasonable valuations could prove tricky considering the exponential growth in fund AUM in the past two years.
Mutual funds have garnered record assets in the past year, with average monthly inflows of ~40-60 billion through systematic investment plans. The industry has doubled its assets in the last three years, with overall AUM totalling over ~21 trillion on March 31, 2018. In 2017-18, MFs pumped ~1.4 trillion into Indian equities, more than six times the ~222 billion put in by foreign portfolio investors.
Notably, IDFC has begun the merger process with Capital First. The firms had stated in January that IDFC Bank would acquire Capital First in a share-swap deal valued at about $1.5 billion.