Bharti, AXA likely to end mutual fund tie-up

Within a year of registering its asset management company, Bharti AXA Investment Managers, Bharti Enterprises is likely to exit the joint venture (JV) with the European giant, while retaining the partnership for life and general insurance ventures.

While a company spokesperson said Bharti would either dilute its stake or exit the venture, the fund house is trying to rope in a bank to strengthen its distribution network. In addition, an asset management venture is seen to have closer links with banks, which are looking to offer a wide range of financial products.

“It is nothing special. It’s an AXA-led venture. We have only 25 per cent, with an investment of a few crore rupees. It’s better to have a financial partner in the venture, as Bharti is not managing (the) money. We may dilute or exit, depending on the new partner,” said a Bharti executive.

A Bharti spokesperson said, “Bharti is a minority partner in the asset management JV with AXA. The JV will be seeking to open discussions with potential partners in the banking industry to strengthen its distribution capabilities. As a result, Bharti might dilute its stake or exit, if necessary, at an appropriate time. This decision will not impact its partnership with AXA in the insurance business.”

Though the company intends to be among the top quartile in the industry after five years of operations, Bharti Axa is among the smallest players in the mutual fund industry, with the average assets under management of Rs 186.77 crore at the end of February. The fund house, which started operations a few months ago, has six schemes, with three of these being hybrids. In 2007-08, it reported a loss of Rs 15.53 crore.

This is the second mutual fund partnership to have ended in recent months. A few months ago, Religare and Aegon parted ways, though the two continue to have a life insurance joint venture.

Banks such as Bank of India are looking to tie up with international players to enter the mutual fund space and could be a potential candidate for acquiring stake in Bharti AXA. Private sector lender Axis Bank is expected to start operations soon. At the same time, banks such as Standard Chartered have exited the mutual fund business.