Invesco to acquire 49% stake in RAMC

Written by fe Bureau | Mumbai | Updated: Sep 28 2012, 06:42am hrs
In the fourth major deal in the Indian mutual fund industry this year, global investment management firm Invesco entered into an agreement on Thursday to acquire a 49% stake in Religare Asset Management Company (RAMC) the asset management arm of Religare Enterprises (REL). The strategic purchase comes in the wake of recent regulatory changes aimed at giving a leg-up to an industry that is reeling under the impact of dwindling assets.

While the company did not disclose the deal value, it is reportedly being pegged at around R450 crore, which would value the AMC at around R920 crore. The joint venture, Religare Invesco Asset Management Company, will be headed by Saurabh Nanavati, CEO of RAMC, along with the management team. The transaction is subject to regulatory approvals.

The MF industry has not been doing well for quite some time and with the equity market being flat, there has been pressure on both the toplines and bottomlines of AMCs. Consolidation in the industry was expected at some level; this is probably part of that, said Gautam Mehra, executive director, tax & regulatory services, PwC.

RAMC ranks 14 among the 44 fund houses operational currently in the market, with assets under management (AUM) of nearly R11,000 crore for the quarter ended June 30, 2012, as per Amfi data. As per the companys Thursday press release, RAMC had combined onshore and offshore advisory assets under management of over $2.6 billion as of August 31, 2012, with a presence in 53 cities across India.

REL is controlled by billionaire brothers Malvinder and Shivinder Singh. JP Morgan acted as the exclusive financial advisor to REL on this transaction.

This addition will enhance Invescos presence in an important and growing market, while providing Religares clients access to our broad range of investment solutions, said Martin L. Flanagan, president and CEO of Invesco. Our agreement with Religare will expand the comprehensive range of investment capabilities Invesco provides to our retail and institutional clients around the world, and further position both firms for long-term success.

Invesco currently has a presence in India through its affiliate WL Ross & Co. It also operates an enterprise centre in Hyderabad, first opened in 2006, employing more than 600 staff across a range of global support functions including information technology, investment operations, finance, compliance and human resources.

We are pleased to bring a global asset manager of Invescos repute as a partner in our asset management business. This investment is indeed a validation of Religares belief in the long term growth potential of the Indian financial services industry, said Religare Enterprises CEO Shachindra Nath.

According to him, Religares asset management business has consistently focused on developing investment capabilities through a well-defined, proprietary investment process both in equity and fixed income. With a good 3-year performance track record and solid revenue growth, we believe that both our retail and offshore businesses would be propelled to the next level of their growth journey, said Nath.

Earlier this year, Nippon Life bought a 26% stake in Reliance MF for $290 million, while L&T Finance brought Fidelity Worldwide Investment's Indian mutual fund business for about Rs 550 crore. Schroder Singapore Holding acquired 25% stake in Axis Asset Management, the subsidiary of Axis Bank.

The assets under management of the MF industry stood at Rs 7.52 lakh crore as on August 31, 2012, according to data from the website of industry body Amfi. The industry has been struggling ever since entry loads were done away with in August 2009, with equity schemes seeing inflows in only thirteen months after the ban was enforced.