Goldman Sachs Asset Management India is in advanced talks to purchase rival Fidelity India Fund Management, a person familiar with the development said. Fidelity, which started Indian operations in 2004, had R9,000 crore assets under management until December 2011.
Negotiations are on in the US and a deal, if concluded, could be announced by February, the same person said. ?We do not have comment at this point,? a Goldman Sachs India spokesperson said in an email response to FE.
Goldman Sachs, a late entrant in the R6.75 trillion Indian mutual fund industry in 2010, purchased Benchmark Asset Management last year which managed assets worth R3,000 crore.
?Fidelity Worldwide Investment is conducting a strategic review of its onshore business in India,? the company had said earlier after media reports of a planned sale. ?Like all strategic reviews, all options are covered. The review is underway and it is too preliminary to discuss any outcome.? JPMorgan is advising Fidelity. The fund owns Fidelity Management and Research, which provides technology support to global operations.
Mutual funds are valued at a percentage of the assets they manage and the expertise of the team managing funds. It can range from 1% to 13%. ?It will be a good opportunity for Goldman Sachs as Fidelity has a better retail portfolio and an excellent team, says an executive director of a rival fund. She or her firm cannot be quoted as the company does not comment on rivals. Mutual fund industry with 44 players had been struggling with retail investors shying away from investment and Securities Exchange Board of India asking companies to pay commission to agents.
?It has moved from a push industry to a pull industry? the executive director said. ?It will take a while for retail investors to return to mutual funds.?