UBI Sells 40% in MF Arm to Dai-ichi Life

The Economic Times - - Money -

Mumbai: State-run Union Bank of In­dia has signed a deal to sell 40% stake in its mu­tual fund busi­ness to Dai-ichi Life In­surance Com­pany of Ja­pan.

The en­try of the Ja­panese fund with­deep­pock­etswill­no­ton­lyraise the prospects of Union Mu­tual Fund,bu­tal­soac­cel­er­ateth­ecom­pe­ti­tion in an in­dus­try which is grow­ing at 32% last fis­cal and dou­bled from July 2014.

“The board has given ap­proval to part­ner with Dai-ichi. The de­tails are yet to be worked out,’’ said Ra­jki­ran Rai, man­ag­ing di­rec­tor at Union Bank of In­dia.

Ear­lier, Union Bank had tied up with KBC Par­tic­i­pa­tions Ren­tal SA to form KBC As­set Man­age­ment Com­pany, where the Bel­gian firm held 49% in the as­set man­age­ment busi­ness. Later, in Septem­ber 2016, KBC sold its en­tire stake in mu­tual fund to Union Bank of In­dia.

In­dian mu­tual fund in­dus­try has come of age mak­ing it at­trac­tive for global play­ers. Ja­pan’s Nip­pon owns a stake in Re­liance As­set Man­age­ment which is poised to get listed on the stock ex­changes. Global play­ers like Pru­den­tial and Franklin Templeton dom­i­nate the in­dus­try.

In July, a clutch of funds, based in the US and Sin­ga­pore picked up a 4.43% stake in Re­liance As­set Man­age­ment for ₹ 675 crore.

In terms of as­sets un­der man­age­ment(AUM),UnionMu­tu­alFundis ranked No 30 amongst 42 AMCs, with an av­er­age AUM of ₹ 3,767 crore at the end of June 2017. The In­dian Mu­tual fund in­dus­try has a to­tal AUM of ₹ 19.97 lakh crore. “An as­set man­age­ment com­pany could be val­ued on the mix of as­sets it has. Eq­uity as­sets could fetch you 4-6%, while debt as­sets could be 1-2%. In ad­di­tion brand, size, prof­itabil­ity of the AMC could also play a cru­cial part,” says Kaus­tubh Be­la­purkar, di­rec­tor of fund re­search at Morn­ingstar In­dia.

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