In a yet another sign of consolidation in the Indian mutual fund space, Bank of India (BoI) has acquired 51% stake in Bharti Axa Mutual Fund for an undisclosed amount. The deal marks the government-owned bank’s return to the MF industry after more than two decades.

Bank of India and AXA Investment Managers Asia Holding have now upon receipt of all regulatory approvals, completed the formalities for acquisition of 51% of the equity stake of Bharti AXA investment Managers and Bharti AXA Trusteeship Services, the bank said in a filing to the BSE. While the remaining 49% stake will be with the Axa Group, the deal will lead to the exit of Bharti Enterprises, which had about 25% stake in the fund house, from the asset management business. The public sector bank has acquired 25% stake from Bharti, while the rest 26% from the Axa Investment Managers Asia Holdings.

According to market sources, the deal value would be small as the total assets under management of Bharti Axa MF is pegged at only Rs 153 crore. Typically, deals in MF space are done at an average valuation of 3-4% depending on the kind of schemes available with the target fund house.

The deal comes close on the heels of L&T Mutual Fund acquiring Fidelity Asset Management Company (AMC). More recently, UK’s largest asset management company Schroders acquired a 25% stake in Axis Bank-promoted Axis Mutual Fund for an undisclosed amount.

The BoI-Bharti Axa deal was in the making for long as the requisite regulatory approvals were sought. In December 2011, BoI had said the name of the fund house would be changed to Bank of India AXA Investment Managers after the acquisition is complete.

?A lot of banks are looking to get back into the mutual fund business and acquisition is one way of doing so,? said Dhirendra Kumar, CEO, Value Research. ?The AUM is small so they will have to build the business ground-up but they get a management team to begin with.?

Currently, there are eight MFs either fully or partly owned by banks along with overseas partners. These include Baroda Pioneer Mutual Fund, Canara Robeco Mutual Fund, ICICI Prudential MF, Principal MF of PNB and SBI Mutual Fund, Axis MF, IDBI Mutual Fund and Union KBC MF of Union Bank.