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
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.