Birla Sun to Buy ING MF As­sets

Deal to add around 1,100 cr to Birla Sun Life AMC’s as­sets un­der man­age­ment of about 97,500 cr

The Economic Times - - Front Page - OUR BUREAU As­set Watch

Birla Sun Life As­set Man­age­ment, the coun­try’s fourth­largest mu­tual fund, is ac­quir­ing the as­sets of ING In­vest­ment Man­age­ment, a joint ven­ture be­tween Dutch fi­nan­cial ser­vices group ING, real­tor Ra­jan Ra­heja and Kirti Eq­ui­ties. The deal will add about .` 1,100 crore to Birla’s as­sets un­der man­age­ment (AUM) of roughly .` 97,500 crore as on March 31. Over­all as­sets man­aged by the mu­tual fund in­dus­try are about .` 9,05,000 crore as on March 31.

This would be Birla Sun Life’s first ac­qui­si­tion in a decade. In 2004, it had ac­quired schemes of the high­pro­file Al­liance Cap­i­tal As­set Man­age­ment In­dia.

Birla did not dis­close how much it paid for the ac­qui­si­tion, but in­dus­try sources said the deal could have hap- pened at 2-3% of ING’s to­tal as­sets. ING man­ages as­sets worth .` 750 crore un­der its do­mes­tic mu­tual fund busi­ness, of which 60% of the money is in debt schemes. Un­der the port­fo­lio man­age­ment ser­vices busi­ness, which is not dis­closed, its AUM is at about .` 350 crore. “The ac­qui­si­tion will add 80,000 new in­vestors to our ex­ist­ing base of around 24 lakh,” said A Bala­sub­ra­ma­nian, chief ex­ec­u­tive of Birla Sun Life As­set Man­age­ment. He said Birla would not ab­sorb ING’s staff in the deal

Ear­lier, ING had short­listed Axis Mu­tual Fund to ac­quire its do­mes­tic mu­tual fund as­sets. Sources said, how­ever, talks were called off at the fi­nal stage. The ING Group, which is in the process of shed­ding var­i­ous non-core businesses world-wide, has been scout­ing for a buyer for its lo­cal mu­tual fund unit for a while. The deal would be the sec­ond in

Re­cent deals in the mu­tual fund in­dus­try the mu­tual fund in­dus­try in a span of six months. Late in De­cem­ber, Mor­gan Stan­ley had an­nounced the sale of the schemes of its In­dian as­set man­age­ment com­pany to HDFC Mu­tual Fund for 5-6% of its as­sets un­der man­age­ment. Sev­eral for­eign fi­nan­cial ser­vices firms are look­ing to exit the do­mes­tic mu­tual fund in­dus­try as most of them are reel­ing un­der losses and they have been un­able to scale-up the do­mes­tic busi­ness in the way they ex­pected.

The Se­cu­ri­ties and Ex­change Board of In­dia (Sebi)’s move to ban en­try load — an up­front fee that mu­tual funds charged unit hold­ers to pay dis­trib­u­tors — in Au­gust 2009, cou­pled with strong re­demp­tions, have im­pacted the 44-mem­ber strong lo­cal in­dus­try.

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