Veteran investment banker Hemendra Kothari’s DSP Group has bought out BlackRock’s 40% stake in DSP BlackRock Investment Managers.
Veteran investment banker Hemendra Kothari’s DSP Group has bought out BlackRock’s 40% stake in DSP BlackRock Investment Managers. While the price was not known, deals in the Indian mutual fund industry are typically valued at 5-7% of assets under management. As such, the transaction would have been priced at anywhere between Rs 1,700 crore and Rs 2,400 crore.
The average assets under management (AAUM) at DSP BlackRock Mutual Fund in the January-March quarter were Rs 86,325.70 crore, data from Association of Mutual Funds in India showed. The total AAUM across 42 players is about Rs 23 lakh crore; flows into MFs among the biggest in 2017-18 at Rs 1.71 lakh crore on the back of flows of Rs 70,300 crore in 2016-17. DSP BlackRock manages and advises Indian assets in excess of Rs 1.10 lakh crore.
Over the past few years several foreign players — JPMorgan MF, Fidelity MF, Morgan Stanley MF, ING MF, Goldman Sachs MF and Deutsche MF — have exited the asset management business.
While Edelweiss AMC bought out JPMorgan’s business, Deutsche Mutual’s assets were taken over by DHFL Pramerica. Again, Kotak Mutual Fund bought out Pinebridge AMC and Reliance Mutual Fund acquired Goldman Sachs’ business. Many of the 43 AMCs remain unprofitable.
DSP BlackRock chairman Hemendra Kothari said the group might not partner any player for the time being. “We believe we have just scratched the surface of the opportunity that lies before us and are poised to capture a significant portion of that growth,” Kothari said.
The DSP Group’s joint venture arrangement with Merrill Lynch Investment Managers in 1996 established its retail asset management business in India, DSP Merrill Lynch Asset Management (India). This business went on to become DSP BlackRock Investment Managers in 2008 (after BlackRock took over Merrill Lynch’s global asset management business in 2006).
The annual reports of DSP BlackRock Investment Managers show the company reported a net profit of Rs 85.46 crore for the year ended 2016-17. The fund house has over 30 open-ended schemes that include debt, equity and international funds.
Laurence D Fink, chairman and CEO of BlackRock, said, “DSP has been a superb and valued partner to BlackRock for many years. I have the highest regard for Hemendra Kothari and the DSP family and wish nothing but the best for them in the years ahead. BlackRock remains deeply committed to India, and we look forward to having a continued positive impact on the asset management industry in the country.”