Edelweiss to buy JP Morgan’s India mutual fund business

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Mumbai | Published: March 23, 2016 12:16:44 AM

JP Morgan Asset Management has agreed to sell its Indian mutual fund business to Edelweiss Asset Management for an undisclosed amount.

JP Morgan Asset Management has agreed to sell its Indian mutual fund business to Edelweiss Asset Management for an undisclosed amount. Industry participants, however, pegs the deal to be between 1% and 1.5% of the average assets under management (AAUMs) of the fund house.

In the last few years, there has been regular exit of foreign players largely because they find India a difficult market to operate in and their inability to scale up their equity base. The average assets under management (AAUMs) of JP Morgan Asset Management is R7,081 crore as on December 2015.

“We have built a substantial onshore funds business in India over the past decade. As a result of a global strategic review and after careful consideration of what is best for our clients and employees, we have decided to find an acquirer for this business,” said Michael Falcon, chief executive officer of Asia-Pacific, global investment management, JP Morgan Asset Management.

In the last few months, there were talks that several top fund houses were in fray to buy assets of JP Morgan Asset Management. Edelweiss was chosen primarily because it will retain majority of employees, said a person familiar with the development.

In August, JP Morgan Mutual Fund faced a problem due to its exposure to debt securities of Amtek Auto and had restricted redemption from two of its debt schemes — Short Term Income Fund and India Treasury Fund. The move to stop redemption came in the wake of decline in NAVs of the schemes having collective exposure of about R200 crore to the auto ancillary player.

Rashesh Shah, chairman & CEO of Edelweiss Group, said: “Edelweiss Group continues to remain focused on the India growth story and making inroads into the retail space by leveraging our well diversified platform. Given the complementary business advantages and the significant business that JPMAM 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. I welcome all of JPMAM’s employees, clients and partners to the Edelweiss family.”

In the last few years, foreign players such as Goldman Sachs Asset Management and Deutsche Asset Management Company (AMC) sold their stake to Indian players. In October, Belgium-based KBC Asset Management sold its 49% stake in mutual fund business to its partner Union Bank.

While JP Morgan Asset Management will continue to offer India investment strategies through its offshore India equity investment team, which is based in Hong Kong and manages funds for clients globally. Additionally, JPMAM will continue to operate its global real assets investment business in India.


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