Edelweiss Asset Management on Tuesday announced the acquisition of bigger rival JP Morgan’s mutual fund business in India, which has assets worth over Rs 7,000 crore, marking yet another exit of a foreign fund house from the over Rs 13 lakh-crore industry.
The companies did not disclose the financial details of the acquisition, but sources pegged the deal size at less than Rs 100 crore.
Under the deal, Edelweiss will acquire all onshore fund schemes managed by JP Morgan Asset Management India including its country-based onshore mutual fund business and the international fund of funds, Edelweiss said in a statement.
Post acquisition, the assets under management (AUM) of the combined entity would be Rs 8,757 crore.
Along with the schemes, Edelweiss said it is committed to absorbing majority of the employees of JP Morgan MF ensuring business continuity as well as a platform for enhanced growth.
The deal, which is subject to regulatory approvals, is expected to be completed in four to six months, Edelweiss Group CEO Global Assets and Wealth Management Nitin Jain said.
It is believed that several fund houses including Tata Asset Management and Reliance MF were in race to acquire JP Morgan MF.
In the past few years, a number of global players have exited Indian mutual fund business. Reliance Capital Asset Management last year announced takeover of global giant Goldman Sachs’ mutual fund business in India for Rs 243 crore in an all-cash deal.
Standard Chartered sold mutual fund business in India to IDFC in 2008, Fidelity sold mutual fund to l&T Finance in 2012, while last year HDFC MF acquired Morgan Stanley’s fund business here.
Besides, Birla Sunlife had acquired ING Mutual Fund, Kotak MF has bought PineBridge Mutual Fund and Pramerica has taken over Deutsche Bank’s MF business in India.
Still there are more than 40 fund houses in the country with a total AUM of over Rs 13 lakh crore.
JP Morgan Mutual Fund had assets base of Rs 7,081 crore at the end of December, while that of Edelweiss was at over Rs 1,600 crore.
JP Morgan had entered into the Indian mutual funds business in 2007. last year, JP Morgan MF got into trouble due to its exposure to debt securities of Amtek Auto.
Edelweiss Group Chairman and CEO Rashesh Shah said: “Given the complementary business advantages and the significant business that JP Morgan MF has built, this acquisition is a natural win for both Edelweiss and JP Morgan. There will be planned investments into the business in terms of products, technology, distribution and a clear strategy to compound growth.”
The acquisition will further strengthen Edelweiss Group’s Rs 31,000 crore global asset management businesses, which include the group’s existing mutual fund business, credit alternative funds, offshore funds and equity funds.
“Edelweiss having focused on market expansion and smart product performance has seen a doubling of its AUM, making it among the fastest growing AMC this fiscal,” Edelweiss Asset Management CEO Vikaas M Sachdeva said.