In an effort to consolidate and expand its customer base, HDFC Mutual Funds announced the acquisition of Morgan Stanley Mutual Fund’s all the eight schemes.
The total asset value of the eight schemes is estimated to be Rs 3,290 crore. With Securities Exchange Board of India (Sebi) again and again urging mutual fund players to consolidate their business, the acquisition would help country’s largest fund house to expand its foot print with Morgan Stanley Mutual Fund’s customer base.
Talking about the deal, HDFC Asset Management Company’s Managing Director, Milind Barve said, “The agreement is subject to regulatory approvals as required. The average combined assets under management of the eight schemes for quarter ended September 30, 2013 was Rs 3,290 crore.” However, HDFC Mutual Fund did not disclose the deal size, Barve added, “We have signed a definitive agreement to acquire all the eight schemes of Morgan Stanley Mutual Fund in India.” He also stressed that the deal would help in increasing customer base of HDFC Mutual Fund which currently has Assets Under Management (AUM) of well above Rs 1 lakh crore.
The US based financial services giant, Morgan Stanley, got Sebi’s registration to run mutual fund business in India 20-years ago in 1993, while first scheme was launched in 1994. At the end of November 30, total AUM of mutual funds rose to Rs 8.9 lakh crore from Rs 7.01 lakh crore as on March 31, 2013.
Going through a tough phase, the deal expected to kick start the consolidation of business in the mutual fund sector. The sector for many months has been tackling issues on distribution side, volatile stock markets and loss of investor interest. For some time now, Sebi Chairman, UK Sinha has been urging for consolidation in the asset management industry.
As per the data provided by Sebi, mutual funds have been net sellers in the stock markets in December. By December 19, mutual funds have withdrawn Rs 1,013.4 crore from equity markets and invested Rs 38,949.39 crore in debt markets. In the month of November as well, mutual funds stayed out of the choppy equity markets and invested more into the debt markets. As per Sebi, for the month of November, mutual funds sold shares worth Rs 482.20 crores while invested Rs 41,623.50 crore in debt markets.